Impact of Foreign Institutional Investors on Dividend Policy in Korea: A Stock Market Perspective
Journal of Financial Management and Analysis, Vol. 23, No. 1, January-June 2010
18 Pages Posted: 10 Oct 2010 Last revised: 20 Oct 2010
Date Written: June 4, 2010
Abstract
This paper empirically investigates the impact of foreign institutional investors on corporate dividend policy in the Korean stock market. Using sample firms whose ownership by foreign investors was 5% or higher through the fiscal period from 2001 to 2007, we find that foreign institutional investors with more than 5% of a company’s shares can exert a significant impact on dividends. In addition, we find that the more shares that foreign institutional investors have over major shareholders and the more shares that foreign institutional investors have over the previous year, the stronger the impact of foreign institutional investors have on corporate dividend policy. This study empirically shows the impact of foreign institutional investors from the viewpoint of corporate governance in Korea, where local institutional investors play inadequate roles as stakeholders. It also complements the methodological problems pointed out in previous studies by applying a panel model.
Keywords: Foreign Institutional Investor, Foreign Shareholder, Dividend Policy, Corporate Governance
JEL Classification: C52, G24, N25, O16
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Disappearing Dividends: Changing Firm Characteristics or Lower Propensity to Pay?
By Eugene F. Fama and Kenneth R. French
-
Dividends, Share Repurchases, and the Substitution Hypothesis
By Gustavo Grullon and Roni Michaely
-
Payout Policy in the 21st Century
By Alon Brav, John R. Graham, ...
-
Payout Policy in the 21st Century
By Alon Brav, Campbell R. Harvey, ...
-
Financial Flexibility and the Choice between Dividends and Stock Repurchases
By Clifford P. Stephens, Murali Jagannathan, ...
-
By Roni Michaely and Franklin Allen
-
By Joan Farre-mensa, Roni Michaely, ...
-
Payout Policy in the 21th Century: The Data
By Alon Brav, Campbell R. Harvey, ...
-
A Catering Theory of Dividends
By Malcolm P. Baker and Jeffrey Wurgler
-
A Catering Theory of Dividends
By Malcolm P. Baker and Jeffrey Wurgler