Minimum Dividend Payout Obligation Special Feature: The Brazilian Case

64 Pages Posted: 13 Jul 2016 Last revised: 20 May 2017

Date Written: July 12, 2016


On their profits, companies must decide whether to distribute to its shareholders or invest in profitable projects that enhance future results. Many researches tried to discover the factors that influenced companies to distribute part of their profits based on theirs total dividend payout. However, some countries require a minimum payment of dividends. Despite the existence of obligatory dividend, those studies have not decomposed dividends into the minimal required by law and corporate bylaws. We consider that the desire to pay occurs only when companies pay an amount higher than this minimum, otherwise it is their law or contractual obligation fulfillment. So, we aim to demonstrate the impact of not considering the mandatory dividend on the determinants of dividends and, in a broader sense, also demonstrate that many times, by not considering legislation in finance studies, researches do not fully reflect reality. To this end, we analyzed a sample of 1792 dividend distributions from 2007 to 2015 in Brazil, an important emerging country with mandatory dividend. Our results corroborates with the concept that companies that pay above the obligatory and those who do not are different, and the absence of consideration of this law can results in biased results. So, no legal and bylaws deep interpretation may bring us a misunderstanding of financial decisions.

Keywords: Dividends, Corporate Bylaws, Legislation, Minimum Dividend

JEL Classification: K22, G35, G38

Suggested Citation

Procianoy, Jairo Laser and Vancin, Daniel, Minimum Dividend Payout Obligation Special Feature: The Brazilian Case (July 12, 2016). Available at SSRN: or

Jairo Laser Procianoy

UFRGS - Unisinos ( email )

No Address Available
555133314693 (Phone)

Daniel Vancin (Contact Author)

UFRGS ( email )


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