Ownership Structure and Dividend Smoothing: Cross-Country Evidence

56 Pages Posted: 31 Dec 2014

See all articles by Nahid Rahman

Nahid Rahman

University of Technology Sydney (UTS); Financial Research Network (FIRN)

Date Written: November 25, 2002


We investigate the dividend smoothing behavior of firms using a large sample of firms covering 28 countries. Our results show that the levels of dividend smoothing in the firms vary substantially across countries. This finding confirms and extends the findings of previous research that the dividend policy of the U.S. firms differs materially from the dividend policies of the firms in other countries. We propose that an extension of the agency view of dividends may explain the diversity of dividend smoothing behavior of our sample firms. We argue that the agency view of dividends implies that both firm- and country-level ownership structures are potentially important determinants of the dividend smoothing decisions of the firms. The results presented in this paper support this view. Both firm- and country-level ownership concentrations are negatively associated with dividend smoothing. Our results show that the effects of country-level ownership are much stronger than the effects of firm level ownership. The relation between ownership structure and dividend smoothing is robust to a variety of alternative explanations.

Keywords: Corporate Governance, Payout Policy, Dividend Smoothing, Ownership Structure

JEL Classification: G32, G35

Suggested Citation

Rahman, Nahid I., Ownership Structure and Dividend Smoothing: Cross-Country Evidence (November 25, 2002). Available at SSRN: https://ssrn.com/abstract=2543785 or http://dx.doi.org/10.2139/ssrn.2543785

Nahid I. Rahman (Contact Author)

University of Technology Sydney (UTS) ( email )

15 Broadway, Ultimo
PO Box 123
Sydney, NSW 2007

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane

HOME PAGE: http://www.firn.org.au

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