Agency Conflicts and Corporate Payout Policies: A Global Study

49 Pages Posted: 6 Mar 2008 Last revised: 10 Mar 2014

Söhnke M. Bartram

Warwick Business School - Department of Finance

Philip R. Brown

UWA Business School, M250; Financial Research Network (FIRN)

Janice C. Y. How

Queensland University of Technology; Financial Research Network (FIRN)

Peter Verhoeven

Queensland University of Technology - QUT Business School; Financial Research Network (FIRN)

Multiple version iconThere are 3 versions of this paper

Date Written: March 13, 2012

Abstract

We investigate the roles of firm and country level agency conflicts in determining corporate payout policies. Based on a large sample of 29,610 firms in 43 countries from 2001 to 2006, we find that in high protection countries, investors are able to use their legal powers to extract cash from firms but their ability to do so can be substantially hindered when agency costs at the firm level are high. In poor protection countries, investors can seek refuge in firm level governance mechanisms to curb agency conflicts, suggesting a substitution between country and firm level investor protection. Finally, compared to repurchases, we find dividends are more likely to be the sole method of payout in high protection countries and in less closely held firms.

Keywords: Dividends, share repurchases, agency costs, payout choice

JEL Classification: G3, F4, F3

Suggested Citation

Bartram, Söhnke M. and Brown, Philip R. and How, Janice C. Y. and Verhoeven, Peter, Agency Conflicts and Corporate Payout Policies: A Global Study (March 13, 2012). Available at SSRN: https://ssrn.com/abstract=1068281 or http://dx.doi.org/10.2139/ssrn.1068281

Söhnke M. Bartram

Warwick Business School - Department of Finance ( email )

Coventry, CV4 7AL
United Kingdom
+44 (24) 7657 4168 (Phone)
+1 425 952 1070 (Fax)

HOME PAGE: http://go.warwick.ac.uk/sbartram/

Philip R. Brown (Contact Author)

UWA Business School, M250 ( email )

Crawley, Western Australia 6009
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Janice C. Y. How

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Peter Verhoeven

Queensland University of Technology - QUT Business School ( email )

GPO Box 2434
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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