Dividends and Corporate Shareholders

Posted: 1 Jun 2009

See all articles by Michael J. Barclay

Michael J. Barclay

University of Rochester - Simon School (Deceased)

Clifford G. Holderness

Boston College - Department of Finance

Dennis P. Sheehan

Pennsylvania State University

Multiple version iconThere are 2 versions of this paper

Date Written: June 2009

Abstract

Corporations uniquely have a tax preference for cash dividends. Nevertheless, dividends do not increase following trades of large-percentage blocks of stock from individuals to corporations. Moreover, although one-third of firms have corporate blockholders, 68% of these firms pay no dividends, and ownership is not clustered at levels that increase the tax benefits of dividends. These findings are not driven by the investing firms’ tax rates or by agency problems. Instead, operating companies expand the target firms and pursue joint ventures. Dividends are lower with these investors. Financial investors are not attracted to dividend-paying firms and tend to be passive.

Keywords: G30, G32, G35

Suggested Citation

Barclay, Michael J. and Holderness, Clifford G. and Sheehan, Dennis P., Dividends and Corporate Shareholders (June 2009). The Review of Financial Studies, Vol. 22, Issue 6, pp. 2423-2455, 2009, Available at SSRN: https://ssrn.com/abstract=1408429 or http://dx.doi.org/hhn060

Michael J. Barclay (Contact Author)

University of Rochester - Simon School (Deceased)

Clifford G. Holderness

Boston College - Department of Finance ( email )

Carroll School of Management
140 Commonwealth Avenue
Chestnut Hill, MA 02467-3808
United States
617-552-2768 (Phone)
617-277-8071 (Fax)

Dennis P. Sheehan

Pennsylvania State University ( email )

Smeal College of Business
University Park, PA 16802
United States
814-863-8512 (Phone)
814-865-3362 (Fax)

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