Too Few Dividends? Groups’ Tunneling Through Chair and Board Compensation
Francisco Urzúa I.
March 24, 2009
Journal of Corporate Finance, Vol. 15, No. 2, 2009
Group affiliation increases boards’ compensation in countries as different as Korea, India, Hong Kong and Italy. In this paper, I examine a 6-year sample of controller–dominated, concentrated-ownership firms in Chile in search of a rationale for these results.
I show that, for group-affiliated companies, controllers’ presence on the board of directors is associated with a strong negative relation between chair and board compensation and controllers’ cash-flow rights. Furthermore, I show that controllers of group-affiliated companies prefer to increase chair and board compensation rather than dividends as their cash-flow rights decrease.
Number of Pages in PDF File: 36
Keywords: Tunneling, groups, board compensation, dividends
JEL Classification: G34Accepted Paper Series
Date posted: August 25, 2010
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