Say-on-Dividend

77 Pages Posted: 23 Feb 2015

See all articles by María Gutiérrez Urtiaga

María Gutiérrez Urtiaga

Universidad Carlos III de Madrid-Departamento de Economía de la Empresa; European Corporate Governance Institute (ECGI)

Maria Isabel Sáez Lacave

Universidad autonoma de Madrid, Faculty of Law; European Corporate Governance Institute (ECGI)

Date Written: February 15, 2015

Abstract

Most listed firms have concentrated ownership structures. However this ownership type is problematic. A clinical analysis reveals that the corporate governance in these firms in terms of liability, voice and exit faces important design problems. Our analysis shows that the corporate governance of these firms is mainly aimed at checking the shareholders manager agency problem leaving the controlling shareholder-minority agency problem unresolved. Therefore it is crucial to provide growing companies with commitment tools that allow them to access capital markets and to raise funds from outside investors in better terms without having to give up the benefits of control. This leads us to a proposal that could improve the protection of outside investors while maintaining the informational benefits of concentrated ownership structures: a “Say-on-Dividend” policy. This proposal is centered in empowering independent directors and activist and institutional investors in the design of dividend policy as informed intermediaries that can represent the voice of the outside investors in the control of the funds that they invest in the firm.

Keywords: Corporate Governance, Ownership Structure, Ownership Concentration, Corporation Law, Payout Policy, Dividends, Institutional Investors, Hedge Funds, Activists, Independent Directors

JEL Classification: G32, G34, G35, K22

Suggested Citation

Gutiérrez Urtiaga, María and Sáez Lacave, Maria Isabel, Say-on-Dividend (February 15, 2015). European Corporate Governance Institute (ECGI) - Law Working Paper No. 285/2015, Available at SSRN: https://ssrn.com/abstract=2565475 or http://dx.doi.org/10.2139/ssrn.2565475

María Gutiérrez Urtiaga (Contact Author)

Universidad Carlos III de Madrid-Departamento de Economía de la Empresa ( email )

Calle Madrid 126
Getafe, 28903
Spain
+34-91 624 58 40 (Phone)
+34-91 624 96 07 (Fax)

European Corporate Governance Institute (ECGI)

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

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

Maria Isabel Sáez Lacave

Universidad autonoma de Madrid, Faculty of Law ( email )

C/ Kelsen 1
Madrid, 28049
Spain

European Corporate Governance Institute (ECGI) ( email )

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

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