Dividend Policies of Privately Held Companies: Stand‐Alone and Group Companies in Belgium

Abstract

This study examines the dividend policies of privately held Belgian companies, differentiating between stand-alone companies and those affiliated with a business group. We find that privately held companies typically do not pay dividends. Compared to public companies, they are less likely to pay dividends and they have lower dividend payouts. Our results also suggest that group companies pay more dividends than stand-alone companies, consistent with the hypothesis that taxexempt group firms redistribute dividend payments on the group's internal capital market. Group companies pay higher dividends if they have minority shareholders.

The effect of family business professionalization on dividend payout

“…About 20 percent of the sample firms pay out dividends (19.92 percent in 2010; 20. in 2011, and 20.33 percent in 2012). These percentages correspond to previous studies on Belgian private firms (Michiels et al, 2015;Rommens et al, 2012). About 31 percent of the sample firms paid a dividend at least once during the period 2010-2012.…”

“…The coefficients are interpreted as the combination of the change in of those above the zero limit, weighted by the probability of being above zero and (2) the change in the probability of being above zero, weighted by the expected value of , if above zero (McDonald and Moffit, 1980). (Michiels et al, 2015;Rommens et al, 2012). About 31% of the sample firms paid a dividend at least once during the period 2010-2012.…”

Employment Protection and Payout Policy

“…For a study on 6 major economies, Denis and Osobov (2008) show that dividend payers are typically larger and more profitable but that outside the U.S. there is little support for a price premium for dividend payers. In comparing public and private firms, Rommens, Cuyvers and Deloof (2012) find that compared to public Belgian firms, private firms typically do not pay dividends, except if they belong to a larger business group. Aktas, Belletre and Cousin (2011) document that very small French business have a strongly negative relationship between financing deficit (including dividend payments) and external debt, suggesting that dividend payouts and investments decisions are financed by substantial levels of external debt.…”

The Architecture of Hr Function in Capital Groups – The Report of Empirical Research

“…A holding company is defined as a professionally managed institution owning a portfolio of stocks in public and privately held companies with the purpose of influencing them. In realizing this objective, a holding company acts both as a financial intermediary and as an active shareholder (Rommens, An;Cuyvers, Ludo;Deloof, Marc, 2012, p. 817). The scope of the influence, presented in the definition, can be differentin practice it depends on the leading role of a holding company.…”