Abstract

http://ssrn.com/abstract=1686983
 
 

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Impact of Foreign Institutional Investors on Dividend Policy in Korea: A Stock Market Perspective


Shinae Kang


Sungkyunkwan University - School of Business Administration

Wonsik Sul


Sookmyung Women's University - Division of Business Administration

Soojung Kim


Kyung Hee Cyber University

June 4, 2010

Journal of Financial Management and Analysis, Vol. 23, No. 1, January-June 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.

Number of Pages in PDF File: 18

Keywords: Foreign Institutional Investor, Foreign Shareholder, Dividend Policy, Corporate Governance

JEL Classification: C52, G24, N25, O16

Accepted Paper Series


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Date posted: October 10, 2010 ; Last revised: October 20, 2010

Suggested Citation

Kang, Shinae and Sul, Wonsik and Kim, Soojung, Impact of Foreign Institutional Investors on Dividend Policy in Korea: A Stock Market Perspective (June 4, 2010). Journal of Financial Management and Analysis, Vol. 23, No. 1, January-June 2010. Available at SSRN: http://ssrn.com/abstract=1686983

Contact Information

Shinae Kang (Contact Author)
Sungkyunkwan University - School of Business Administration ( email )
206 International Hall
Seoul 110-745, 110-745
Korea
Wonsik Sul
Sookmyung Women's University - Division of Business Administration ( email )
Korea
Soojung Kim
Kyung Hee Cyber University ( email )
Seoul
Korea, Republic of (South Korea)
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