Company Dividends and Ownership Structure: Evidence from UK Panel Data

Abstract:     
This study investigates the relationship between dividends and ownership structure for a panel of 330 large quoted UK firms. Controlling for unobserved firm-specific effects, results indicate a negative relationship between dividends and ownership concentration. Ownership composition also matters, with a positive relationship observed for shareholding by insurance companies, and a negative one for individuals. These results are consistent with agency models in which dividends substitute for poor monitoring by a firm's shareholders but can also be explained by the presence of powerful principals who are able to impose their preferred payout policy upon firms.

Number of Pages in PDF File: 19

Keywords: Corporate Governance, Dividends, Agency Models, Ownership Structure, Panel Data

JEL Classification: G22, G23, G32, G34, G32

Accepted Paper Series