Dividend decisions in family businesses: A systematic review and research agenda

Molly, Vincent; Michiels, Anneleen

doi:10.1111/joes.12460

Cited by 10 publications

(8 citation statements)

References 132 publications

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“…Our findings make, at least, two contributions to literature. First, this paper extends the literature related with private equity firms investigation (De Massis et al, 2013;Dick, 2015;González et al, 2014;Molly & Michiels, 2022). These companies are more dependent on bank financing, and this can condition their dividend policy, so we emphasize shareholder control in pyramid structures (Almeida & Wolfenzon, 2007;González et al, 2014).…”

Section: Discussionsupporting

confidence: 56%

“…This study makes two contributions to literature. First, it addresses the calls for researching the dividends policy in closely held companies (De Massis et al, 2013;Dick, 2015;González et al, 2014;Molly & Michiels, 2022). Second, it contributes to the literature related to family businesses -since they have limited financial resources -the company's cash outflows as dividends are more weighed (Michaely & Roberts, 2007).…”

Section: Introductionmentioning

confidence: 99%

“…However, the transmission of confidence signals to the capital market can lead to higher dividends, to make the company's shares more competitive and, thus, preventing investors from considering that the governance of these companies does not protect their interests (Attig et al, 2015;Wei et al, 2011). Despite the research carried out, few studies have focused on unlisted companies (González et al, 2014;Molly & Michiels, 2022), and the known results of publicly traded companies are not directly applicable to them (Dick, 2015), either because of the lower legal protection for investors, or due to more fragile governance systems, resulting from the greater concentration of capital of these companies (Anderson & Reeb, 2003;Seida, 2001). Although unlisted family businesses are more dependent on self-financing and face greater conflicts of interest by opening capital to non-family shareholders (De Massis et al, 2013), research has not yet sufficiently analyzed whether dividends mitigate potential conflicts that may arise, as a result of agency relationships in unlisted companies (Mulyani et al, 2016).…”

Section: Introductionmentioning

confidence: 99%

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Determinants of Dividend Payout in Unlisted Spanish Family and Non-Family Firms

Borralho¹,

Duarte²

2022

EJFB

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The present study analyzes dividends paid in unlisted family and non-family businesses, exploring factors that lead to higher or lower dividend payments. Data from 612 Spanish companies during 12 consecutive years was analyzed. This study indicates that family businesses, as a result of the greater proximity of the family to the business, pay lower dividends. However, we found evidence of higher dividends paid in pyramid structures, susceptible to higher agency costs, both in family and non-family businesses. In family businesses, this can be explained by their aim to maintain levels of trust with minority interests, and in non-family businesses by the purpose to mitigate conflicts of interest as a consequence of greater autonomy of subsidiaries. The evidence obtained adds value to the investigation, which has generally been focused on listed companies. Considering that unlisted companies use the dividend policy to align divergent interests, especially in more fragile governance structures, the results contribute to reduce the gap in research, and have practical implications for companies and investors.

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Section: Discussionsupporting

confidence: 56%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Determinants of Dividend Payout in Unlisted Spanish Family and Non-Family Firms

Borralho¹,

Duarte²

2022

EJFB

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“…Two theories that have been proposed to explain dividends are frequently supported by empirical research: the signaling theory and the agency theory (Molly & Michiels, 2022). In accordance with signaling theory, the announcement of a dividend increase conveys a robust and optimistic message to the market regarding the firm's bright prospects (Miller & Rock, 1985).…”

Section: Esg Performance and Dividend Payment In Family Firmsmentioning

confidence: 98%

The impact of environmental, social and governance (ESG) score on dividend payment of large family firms: What is the role of financial constraints? International evidence

Maquieira,

Espinosa‐Méndez,

Arias

2023

Corp Soc Responsibility Env

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This article studies the relationship between environmental, social and governance (ESG) score and dividend payment for 274 large family firms in the period 2015–2021. This research has three contributions to the literature. First, to the best of our knowledge this is the first article to focus on large family firms considering their greater importance in stock ownership around the world. Second, this sample covers both developed and emerging nations. Third, our study not only establishes a connection between ESG (Environmental, Social, and Governance) criteria and dividend payments but also considers how financial constraints moderate the relationship between ESG scores and dividend payments. The results indicate a positive influence of ESG scores on dividend payments. Furthermore, financial constraints of family firms are negatively related to dividend payments. Finally, the moderating effect of financial constraints on the relationship between dividend payment and ESG show that for high levels of financial constraints that dividends are less sensitive to ESG score. The opposite effect is reported when firms show low levels of financial constraints. Practically speaking, the study demonstrates the value of creating a dividend policy that is in line with the ESG score because they are complementary signals. Additionally, it is important to consider financial limitations when planning financial reserves in family firms. This is due to the diminished correlation between ESG score and dividend payments in the presence of financial constraints.

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“…Recent research in corporate finance still states dividend decisions as unsolved (Al-Najjar and Kilincarslan, 2019). To resolve the dividend puzzle, existing models focusing on firm-specific variables are promising to solve the dividend policy puzzle (Baker et al ., 2002; Molly and Michiels, 2022). We explore the influence of a firm-specific variable, contingent liabilities, on dividend decisions.…”

Section: Introductionmentioning

confidence: 99%

Do contingent liabilities affect dividend decisions?

Chaklader,

Mundi

2023

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PurposeThe paper examines contingent liabilities' effect on the firm's dividend decisions.Design/methodology/approachFixed-effects regression and logit model results estimate the influence of contingent liabilities on firms' dividend decisions using a sample of 2,288 firm-year observations of S&P 500 firms from 2012 until 2022. Robustness checks and results from the 2SLS model further support the authors’ findings.FindingsThe results show that contingent liabilities negatively affect dividend payment decisions. This analysis further demonstrates that the stated effect of contingent liabilities on dividend decisions is more substantial for firms with financing deficits and those with above-industry-average corporate governance scores.Research limitations/implicationsThere needs to be more systematic conceptual reason for measuring uncertainty for firms and its influence on dividend decisions. Future research should use other measures of firm uncertainty to examine the relation of the firm's uncertainty with dividend decisions.Practical implicationsThe authors suggest that contingent liabilities create uncertainty for future cash flows, influence a firm's agency costs and provide credible signals on a firm's prospects to the market. The findings support existing literature that measurable firm-specific variables significantly influence a firm's dividend decisions. The results are robust for an alternative explanation.Originality/valueBy investigating the impact of the influence of contingent liabilities on dividends, the authors extend research on dividend decisions and attempt to provide insights into a firm's dividend decisions by incorporating an off-the-balance sheet item (contingent liabilities) as a significant predictor for dividend decisions.

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Dividend decisions in family businesses: A systematic review and research agenda

Cited by 10 publications

References 132 publications

Determinants of Dividend Payout in Unlisted Spanish Family and Non-Family Firms

Determinants of Dividend Payout in Unlisted Spanish Family and Non-Family Firms

The impact of environmental, social and governance (ESG) score on dividend payment of large family firms: What is the role of financial constraints? International evidence

Do contingent liabilities affect dividend decisions?

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