49 Pages Posted: 19 Apr 2000
Date Written: July 31, 2000
In Western Europe and East Asia, capital markets require higher dividends from corporations tightly affiliated (at the 20% level of control) to a group and, within a group, from corporations whose controlling shareholder has a lower ratio O/C of ownership to control rights. For loosely-affiliated corporations (whose controlling shareholder holds between 10% and 20% of control rights), dividends are positively related to O/C, reflecting expropriation not contained by capital markets. Such corporations comprise 2.94% of European corporations, but 15.44 % of Asian corporations. In our 9 Asian economies, the 11 largest groups at the 10% level comprise 53.75% of all corporations and 84.58% of loosely-affiliated corporations, so most expropriation occurs here. Dividend are higher in Europe than in Asia; having multiple large shareholders increases dividends in Europe but decreases them in Asia.
JEL Classification: G3, G35
Suggested Citation: Suggested Citation
Faccio, Mara and Lang, Larry H.P. and Young, Leslie, Dividends and Expropriation (July 31, 2000). AFA 2001 New Orleans; EFMA Athens 2000. Available at SSRN: https://ssrn.com/abstract=222428 or http://dx.doi.org/10.2139/ssrn.222428