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The Shareholder Base and Payout Policy
Andriy Bodnaruk University of Notre Dame - Mendoza College of Business Per Östberg Norwegian School of Economics and Business Administration (NHH) - Department of Finance and Management Science August 2008 AFA 2009 San Francisco Meetings Paper Abstract: This paper documents a relationship between the shareholder base and payout policy. We find that firms with small shareholder bases have lower payout levels and maintain higher cash holdings than firms with large shareholder bases. These findings suggest that small shareholder base firms have higher costs of external financing. Consistent with this argument, 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.
Keywords: Payout Policy, Cost of Capital, Special Dividends, Repurchases, Asymmetric Information, Investor recognition. JEL Classifications: G35, G14, G15 Working Paper SeriesDate posted: March 26, 2008 ; Last revised: December 27, 2008Suggested CitationContact Information
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