Common Ownership and Firm Dividend Policies

32 Pages Posted: 21 May 2018 Last revised: 1 Dec 2018

See all articles by Alberta Di Giuli

Alberta Di Giuli

ESCP Europe - Department of Finance

Egle Karmaziene

University of Groningen; Swedish House of Finance

Naciye Sekerci

Utrecht University - School of Economics

Date Written: September 13, 2018

Abstract

This paper examines the relationship between common ownership and dividend policy of firms. Using a detailed dataset on investors’ holdings we find that dividend policies of firms that are newly added to a portfolio evolve towards the dividend policies of firms that are already in the portfolio of the new owner. This relation is strongest for owners that are financial institutions that have high turnover and large portfolios. The effect is more pronounced when the new owner purchases firms with low concentrated institutional ownership, high ownership diversity, high fraction of institutional investors, absence of a large controlling family owner and low ownership of the CEO. Overall, our results suggest that owners have a “dividend policy taste”, are influential in dividend decisions, and that their influence depends on the type of co-owner, and on the governance and existing ownership of the firm.

Keywords: common ownership, dividends, institutional investors, family ownership

JEL Classification: G32, G35

Suggested Citation

Di Giuli, Alberta and Karmaziene, Egle and Sekerci, Naciye, Common Ownership and Firm Dividend Policies (September 13, 2018). Available at SSRN: https://ssrn.com/abstract=3175247 or http://dx.doi.org/10.2139/ssrn.3175247

Alberta Di Giuli (Contact Author)

ESCP Europe - Department of Finance ( email )

Paris Campus
79, Avenue de la Republique
Paris, 75543
France

Egle Karmaziene

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

HOME PAGE: http://sites.google.com/site/eglekarmaziene/

Swedish House of Finance

Drottninggatan 98
Stockholm, 111 60
Sweden

Naciye Sekerci

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, +31 30 253 7373 3584 EC
Netherlands

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