Corporate Payouts in Dual Classes

Managerial Finance, Vol. 45, No. 12, pp. 1542-1562, 2019

Posted: 2 Aug 2019 Last revised: 3 Dec 2019

See all articles by Adam Y.C. Lei

Adam Y.C. Lei

Midwestern State University

Huihua Li

St. Cloud State University

Jin Yu

Saint Cloud State University - G. R. Herberger College of Business

Date Written: 2019

Abstract

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

Lei, Adam Y.C. and Li, Huihua and Yu, Jin, Corporate Payouts in Dual Classes (2019). Managerial Finance, Vol. 45, No. 12, pp. 1542-1562, 2019. Available at SSRN: https://ssrn.com/abstract=2770746

Adam Y.C. Lei (Contact Author)

Midwestern State University ( email )

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Wichita Falls, TX 76308
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Huihua Li

St. Cloud State University ( email )

Saint Cloud, MN 56301
United States
(320) 308-3231 (Phone)
(320) 255-3986 (Fax)

Jin Yu

Saint Cloud State University - G. R. Herberger College of Business

St. Cloud, MN 56301
United States

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