Corporate Payouts in Dual Classes
Managerial Finance, Vol. 45, No. 12, pp. 1542-1562, 2019
Posted: 2 Aug 2019 Last revised: 3 Dec 2019
Date Written: 2019
This paper provides empirical evidence showing that dual-class firms use dividend payments to mitigate agency problems while using repurchases of superior shares to maintain the private benefits of control. With a sample of dual-class firms from 1994 to 2015 that have both their superior voting shares and inferior voting shares publicly traded, we show that dual-class firms are more likely than a matched sample of single-class firms to pay dividends in both share classes, but they are more likely to repurchase their superior shares than single-class firms and their inferior shares. These findings are consistent with our agency payout hypothesis.
Keywords: dual classes, dividends, share repurchases
JEL Classification: G35
Suggested Citation: Suggested Citation