Stakeholder Conflicts and Dividend Policy

38 Pages Posted: 30 Apr 2013 Last revised: 10 Aug 2017

See all articles by Øyvind Bøhren

Øyvind Bøhren

BI Norwegian Business School; European Corporate Governance Institute (ECGI)

Morten G. Josefsen

Financial Supervisory Authority of Norway

Pål Erik Steen

Jo Tankers

Date Written: June 16, 2012


This paper compares the dividend policy of owner-controlled firms with that of firms where the owners are a minority relative to non-owner employees, customers, and community citizens. We find that regardless of whether owners or non-owners control the firm, the strong stakeholder uses the dividend payout decision to mitigate rather than to intensify the conflict of interest with the weak stakeholder. Hence, the higher the potential agency cost as reflected in the firm’s stakeholder structure, the more the actual agency cost is reduced by the strong stakeholder’s dividend payout decision. These findings are consistent with a dividend policy in which opportunistic power abuse in stakeholder conflicts is discouraged by costly consequences for the abuser at a later stage. Indirect evidence supports this interpretation.

Keywords: Organizational form, Corporate governance, Stakeholders, Dividends, Banks

JEL Classification: G34, G35

Suggested Citation

Bøhren, Øyvind and Josefsen, Morten G. and Steen, Pål Erik, Stakeholder Conflicts and Dividend Policy (June 16, 2012). Journal of Banking and Finance 36, 2012, 2852-2864., Available at SSRN:

Øyvind Bøhren (Contact Author)

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
46410503 (Phone)

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels

Morten G. Josefsen

Financial Supervisory Authority of Norway ( email )

Akersgata 40
PO Box 8008 Dep.
Oslo, 0030


Pål Erik Steen

Jo Tankers ( email )

Kokstadflaten 5, N-5257

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