62 Pages Posted: 26 Mar 2008 Last revised: 1 Feb 2014
Date Written: February 12, 2012
We examine the relation between the shareholder base and payout policy. Consistent with the idea that the shareholder base is related to the cost of external financing we find that fi rms with small shareholder bases have lower payout levels and maintain higher cash holdings. We show that undertaking an open market repurchase results in a signi cant reduction in the size of the shareholder base. Consequently, we find that firms with small shareholder bases are less likely to undertake a repurchase (reduce the shareholder base even further) and are more likely to pay special dividends.
Keywords: Payout Policy, Cost of Capital, Special Dividends, Repurchases, Asymmetric Information, Investor recognition.
JEL Classification: G35, G14, G15
Suggested Citation: Suggested Citation
Bodnaruk, Andriy and Östberg, Per, The Shareholder Base and Payout Policy (February 12, 2012). AFA 2009 San Francisco Meetings Paper; Swiss Finance Institute Research Paper No. 12-11. Available at SSRN: https://ssrn.com/abstract=1107118 or http://dx.doi.org/10.2139/ssrn.1107118