Abstract

http://ssrn.com/abstract=905816
 
 

References (56)



 
 

Citations (5)



 


 



Why are Firms With Entrenched Managers More Likely to Pay Dividends?


Carrie H. Pan


Santa Clara University - Department of Finance

March 13, 2007


Abstract:     
I find that firms with entrenched managers, as measured by strong managerial power resulting from takeover protections, are more likely to pay dividends. Their high propensity to pay persists over time. My results support the view that firms choose a combination of governance provisions and dividend policy to maximize value. A large cash reserve can be used to deter hostile takeovers. Paying dividends reduces cash holdings, leaving the firm more vulnerable to hostile takeovers. In equilibrium, value-maximizing firms with weak investment opportunities provide managers against takeovers to induce them to distribute cash rather than build a warchest against unwanted takeovers.

Number of Pages in PDF File: 59

Keywords: Dividends, managerial entrenchment, mergers, acquisitions

JEL Classification: G34, G35

working papers series





Download This Paper

Date posted: June 2, 2006  

Suggested Citation

Pan, Carrie H., Why are Firms With Entrenched Managers More Likely to Pay Dividends? (March 13, 2007). Available at SSRN: http://ssrn.com/abstract=905816 or http://dx.doi.org/10.2139/ssrn.905816

Contact Information

Carrie H. Pan (Contact Author)
Santa Clara University - Department of Finance ( email )
Santa Clara, CA 95053
United States
(408)5517188 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 1,723
Downloads: 442
Download Rank: 37,096
References:  56
Citations:  5

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo7 in 0.312 seconds