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Investigation of the Relationship between Ownership–Control Discrepancy and Dividend Policy in Tehran Stock Exchange

Author

Listed:
  • Sakineh Darvishzadeh

    () (Islamic Azad University)

  • Zeinolabedin Sadeghi

    () (Shahid Bahonar University of Kerman)

  • Ahmad Khodamipour

    () (Shahid Bahonar University of Kerman)

Abstract

Present research examines the relation between the ownership-control discrepancy the major shareholder and dividend policy in Tehran Stock Exchange. This research focuses on the effect of the conflicts of interests between majority shareholders and minority shareholders on firms’ dividend policy, because dividend policy can serve as a replacement for this the conflicts of interests. In this research, Investigation all firms in Tehran Stock Exchange that serves the annual reports for the years 2007 through 2010. In a total the selection 134 firms of different industries. The test of the proposed hypotheses conducted on a panel data. In a total research results show that the influence of the ownership to control ratio of the largest shareholder (OWCONT) on dividend payout rate is significantly positive. Indeed, the more this ratio is high, the more the control is low and payout is high. In contrast, if the largest shareholder has a controlling power that exceeds his/her cash flow right, payout is low. Furthermore, control power is significantly related to the dividend policy.

Suggested Citation

  • Sakineh Darvishzadeh & Zeinolabedin Sadeghi & Ahmad Khodamipour, 2013. "Investigation of the Relationship between Ownership–Control Discrepancy and Dividend Policy in Tehran Stock Exchange," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(3), pages 266-274, July.
  • Handle: RePEc:hur:ijaraf:v:3:y:2013:i:3:p:266-274
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    References listed on IDEAS

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    1. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    2. repec:hrv:faseco:30728046 is not listed on IDEAS
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    5. Truong, Thanh & Heaney, Richard, 2007. "Largest shareholder and dividend policy around the world," The Quarterly Review of Economics and Finance, Elsevier, vol. 47(5), pages 667-687, December.
    6. Gugler, Klaus & Yurtoglu, B. Burcin, 2003. "Corporate governance and dividend pay-out policy in Germany," European Economic Review, Elsevier, vol. 47(4), pages 731-758, August.
    7. Benjamin Maury & Anete Pajuste, 2011. "Private Benefits of Control and Dual‐Class Share Unifications," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 32(6), pages 355-369, September.
    8. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    9. Larry H. P. Lang & Mara Faccio & Leslie Young, 2001. "Dividends and Expropriation," American Economic Review, American Economic Association, vol. 91(1), pages 54-78, March.
    10. Luciana Mancinelli & Aydin Ozkan, 2006. "Ownership structure and dividend policy: Evidence from Italian firms," The European Journal of Finance, Taylor & Francis Journals, vol. 12(3), pages 265-282.
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