Ownership structure and tax-friendly dividends

Henry, Darren

doi:10.1016/j.jbankfin.2011.03.003

Cited by 40 publications

(24 citation statements)

References 46 publications

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“…As shown in equation , our model captures the dynamic nature of the dividend policy, and, consequently, we need a dynamic estimator such as the GMM. A recent study by Henry () supports the use of the system GMM estimator to address the issue of potential endogeneity between ownership structure and the dividend policy. Henry notes that the system GMM is also especially suitable to investigate dividend dynamics and the partial adjustment of dividend payments.…”

Section: Data and Estimation Methodsmentioning

confidence: 99%

“…In line with Lintner (), companies approach their target dividends over time and not automatically; therefore, the partial adjustment model of dividends is

\begin{matrix} {Dividends}_{it} - {Dividends}_{it - 1} = β_{0} + λ (Dividends *_{it} \\ - {Dividends}_{it - 1}), \end{matrix}

where 0 < λ < 1 is the speed of adjustment to the target dividend. Following previous studies (Fama & French, ; Henry, ; Miguel et al, ; Shao et al, ), our dividend measure is dividends scaled by total assets. We use this measure of dividends for three reasons.…”

Section: The Modelsmentioning

confidence: 99%

“…where 0 < l < 1 is the speed of adjustment to the target dividend. Following previous studies (Fama & French, 2002;Henry, 2011;Miguel et al, 2005;Shao et al, 2010), our dividend measure is dividends scaled by total assets. We use this measure of dividends for three reasons.…”

Section: Dividends Dividendsmentioning

confidence: 99%

“…The replacement value of total assets is computed as in Hillier et al (2011). Previous studies on corporate dividend policy use similar dividend measures, namely, dividends scaled by total assets, as a dependent variable (Fama & French, 2002;Henry, 2011;Miguel et al, 2005;Shao et al, 2010).…”

Section: Appendix a Dependent And Independent Variablesmentioning

confidence: 99%

See 3 more Smart Citations

Do Family Firms Use Dividend Policy as a Governance Mechanism? Evidence from the Euro zone

Pindado¹,

Requejo²,

Torre³

2012

Corporate Governance

133

110

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Manuscript Type Empirical Research Question/Issue This study investigates whether family firms use dividend policy as a corporate governance mechanism to overcome agency problems between the controlling family and minority investors. We further account for deviations between ownership and control and consider the presence and identity of other large shareholders in family companies. Research Findings/Insights Based on a sample of firms from nine Eurozone countries and using a panel data method, we find that family firms distribute higher and more stable dividends to alleviate expropriation concerns of minority investors. However, the higher dividend payments are mainly explained by family firms with no separation between the largest owner's voting and cash flow rights and those with non‐family second blockholders. Theoretical/Academic Implications We contribute to the literature by shedding light on how the family business model affects companies’ dividend preferences. Our research also highlights the importance of taking into account the identity of large shareholders, especially in a context in which concentrated ownership structures are commonplace. The reported differences in dividend policies between family and non‐family firms help to clarify the variant performances of family businesses found in previous studies. Practitioner/Policy Implications Family firms should regard dividend policy as a governance tool that allows them to attract prospective investors and enlarge their shareholder base. Simultaneously, minority investors can benefit from family firms’ dividend decisions. Our evidence also suggests that European policy makers should lay the necessary foundations to prevent controlling families from adopting ownership structures that serve their own personal interests.

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Section: Data and Estimation Methodsmentioning

confidence: 99%

“…In line with Lintner (), companies approach their target dividends over time and not automatically; therefore, the partial adjustment model of dividends is

\begin{matrix} {Dividends}_{it} - {Dividends}_{it - 1} = β_{0} + λ (Dividends *_{it} \\ - {Dividends}_{it - 1}), \end{matrix}

Section: The Modelsmentioning

confidence: 99%

Section: Dividends Dividendsmentioning

confidence: 99%

Section: Appendix a Dependent And Independent Variablesmentioning

confidence: 99%

See 2 more Smart Citations

Do Family Firms Use Dividend Policy as a Governance Mechanism? Evidence from the Euro zone

Pindado¹,

Requejo²,

Torre³

2012

Corporate Governance

133

110

View full text Add to dashboard Cite

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“…Australian firms continue to pay regular dividends while using repurchases as a way of redistributing excess cash instead of increasing dividend payouts (Aharoni et al, 2011). Given the continued demand for dividends (Henry, 2011), firms are expected to pay dividends, while at the same time, buy back shares in Australia. Similarly, the franking percentage is not expected to have any significant influence on the decision to repurchase shares given the on-market repurchases where firms are not allowed to redesign the price into dividend and capital components:…”

mentioning

confidence: 99%

Factors influencing on-market share repurchase decisions in Australia

Yarram¹

2014

Studies in Economics and Finance

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Access to this document was granted through an Emerald subscription provided by emerald-srm:198285 [] For AuthorsIf you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this study is to examine factors influencing decisions to repurchase shares on-market in Australia. The present study also examines the role of board size, board independence and chief executive officer duality on the decision to repurchase shares on-market by Australian firms. Design/methodology/approach -This study blends the traditional motivations of share repurchases with the influences of governance. The sample consists of all non-financial firms included in the Australian All Ordinaries Index (AOI) for the period 2004-2010. The repurchase sample consists of 104 repurchases undertaken by 62 firms. A probit panel model is used to analyse the decision to repurchase shares on the market. To account for unobserved heterogeneity, random effects panel models are also used. Findings -Analyses of a sample of non-financial firms included in the AOI for the period 2004-2010show that size is significantly positively correlated with the decision to repurchase shares, thus supporting the agency cost. Findings also support the undervaluation and signalling hypotheses. Similarly, there is evidence in support of the view that firms repurchase shares to reach their target optimal capital structure. The present study also finds a significant positive association between board independence and the decision to repurchase shares in Australia. Research limitations/implications -On-market share repurchases help firms to signal their future growth opportunities and resolve agency conflicts. Signals from repurchases also help markets discover the true fundamental values of firms. Governance plays an important role in improving the effectiveness of on-market share repurchases, as independent directors provide both monitoring and discipline which helps to ensure that firms have valid motivations in undertaking share repurchases. Practical implications -These findings have implications for capital restructuring and governance policies. Principle-based governance frameworks that prevail in countries like Australia work as well as rule-based governance. Originali...

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Ownership Structure, Tax Regime, and Dividend Smoothing

Shinozaki

Uchida

2017

New Frontiers in Regional Science: Asian Perspectives

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Ownership structure and tax-friendly dividends

Cited by 40 publications

References 46 publications

Do Family Firms Use Dividend Policy as a Governance Mechanism? Evidence from the Euro zone

Do Family Firms Use Dividend Policy as a Governance Mechanism? Evidence from the Euro zone

Factors influencing on-market share repurchase decisions in Australia

Ownership Structure, Tax Regime, and Dividend Smoothing

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