Dividend Policy, Corporate Control and the Tax Status of the Controlling Shareholder

Forthcoming, Economia e Politica Industriale

54 Pages Posted: 3 Jan 2012 Last revised: 15 Oct 2018

See all articles by Christian Andres

Christian Andres

WHU - Otto Beisheim School of Management

André Betzer

BUW- Schumpeter School of Business and Economics

Inga van den Bongard

University of Mannheim - Finance Area

Marc Goergen

IE Business School, IE University; European Corporate Governance Institute (ECGI)

Date Written: October 3, 2018

Abstract

This paper studies the impact of the concentration of control, the type of controlling shareholder and the dividend tax preference of the controlling shareholder on dividend policy for a panel of 220 German firms over 1984-2005. In line with the agency model, we find a negative relation between family control and dividend payouts at low and high levels of control. We also find evidence of reduced speed of adjustment of dividends at intermediate levels of family control. We further document that corporate control is associated with higher dividend payouts if an industrial or commercial corporation is the majority shareholder of the company. Finally, the results do not provide evidence that the tax preference of the largest shareholder matters for dividend payout decisions.

Keywords: Dividend policy, payout policy, Lintner dividend model, tax clientele effects, corporate governance

JEL Classification: G32, G35

Suggested Citation

Andres, Christian and Betzer, André and van den Bongard, Inga and Goergen, Marc, Dividend Policy, Corporate Control and the Tax Status of the Controlling Shareholder (October 3, 2018). Forthcoming, Economia e Politica Industriale. Available at SSRN: https://ssrn.com/abstract=1978771 or http://dx.doi.org/10.2139/ssrn.1978771

Christian Andres

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
Vallendar, 56179
Germany

André Betzer

BUW- Schumpeter School of Business and Economics ( email )

Gaußstraße 20
Wuppertal
Germany

HOME PAGE: http://finance.uni-wuppertal.de/index.php?id=1153

Inga Van den Bongard

University of Mannheim - Finance Area ( email )

Mannheim, 68131
Germany

Marc Goergen (Contact Author)

IE Business School, IE University ( email )

Finance Department
Maria de Molina, 12
Madrid, 28006
Spain

HOME PAGE: http://www.ie.edu/business-school/faculty-and-research/faculty/marc-goergen/

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

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