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The Shareholder Base and Payout Policy

Author

Listed:
  • Andriy Bodnaruk

    (University of Illinois at Chicago)

  • Per Östberg

    (University of Zurich, Ecole Polytechnique Fédérale de Lausanne, and Swiss Finance Institute)

Abstract

We examine the relation between the shareholder base and payout policy. Consistent with the idea that the shareholder base is related to the cost of external financing we find that firms with small shareholder bases have lower payout levels and maintain higher cash holdings. We show that undertaking an open market repurchase results in a significant reduction in the size of the shareholder base. Consequently, we find that firms with small shareholder bases are less likely to undertake a repurchase (reduce the shareholder base even further) and are more likely to pay special dividends.

Suggested Citation

  • Andriy Bodnaruk & Per Östberg, 2012. "The Shareholder Base and Payout Policy," Swiss Finance Institute Research Paper Series 12-11, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1211
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    File URL: http://ssrn.com/abstract=1107118
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    More about this item

    Keywords

    Payout Policy; Cost of Capital; Special Dividends; Repurchases; Asymmetric Information; Investor recognition;
    All these keywords.

    JEL classification:

    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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