Do corporate managers skimp on shareholders' dividends to protect their own retirement funds?

Eisdorfer, Assaf; Giaccotto, Carmelo; White, Reilly

doi:10.1016/j.jcorpfin.2014.12.005

Cited by 40 publications

(22 citation statements)

References 35 publications

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“…This statement of Black (1996) is remain in effect because the determinant factors that influence dividend decision for firms are not yet known at certain and become subject of discussion for finance study till today. Since dividends represent the wealth of shareholders (Kalay and Loewenstein, 1986;Hanlon and Hoopes, 2014), then managers are obligated by responsibility to increase the wealth of shareholders, which is increasing dividend payment (Hanlon and Hoopes, 2014;Eisdorfer, Giaccotto, and White, 2015). In order to distribute earnings and increase the dividends for shareholders, managers should considering some other factors so it will not impair firm's investment activities (Eisdorfer, Giaccotto, and White, 2015).…”

Section: Introductionmentioning

confidence: 99%

Firm's Dividend Decision i̇n Indonesia: Cater or Mature?

Budiarso

Pontoh

2016

JLECON

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The aim of this study is to find the motivation behind firm's dividend decision in perspective of catering or life cycle theories. Conducting logistic regression for hypothesis testing, the study takes 222 Indonesia listed firms in period 2009 till 2014 as samples. The results of this study show that firms as dividend payers who in mature phase are firms with age below 33 years, have lower debt, larger size, and better profitable, while firms as dividend payers who setting their dividend decision based on catering theory are firms with age above 33 years, have lower debt, larger size and better profitable. The other interesting finding by the study is firms as dividend payers who in mature phase and also set their dividend decision based on catering theory are firms with age above 33 years, have lower debt, smaller size, and better profitable.

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Section: Introductionmentioning

confidence: 99%

Firm's Dividend Decision i̇n Indonesia: Cater or Mature?

Budiarso

Pontoh

2016

JLECON

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“…Several authors examine the impact on firm risk (e.g., Anantharaman and Lee, 2014;Bennett, Guntay & Unal, 2015;Bekkum, 2016). Others investigate how corporate policies of US firms are also influenced by DB pension, for example dividend policy (e.g., Caliskan and Doukas, 2015;Eisdorfer, Giaccotto & White, 2015), cash holdings (Liu, Mauer & Zhang, 2014) and tax policy (e.g., Chi, Huang & Sanchez, 2017;Chaudhry, Yong & Veld, 2017). On the other hand, there is a dearth of studies analyzing the impact of DB pension on corporate policies and firm risk for non-US firms.…”

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confidence: 99%

Do managers act opportunistically towards the end of their career?

Kabir

Veld‐Merkoulova

2018

Journal of International Financial Markets, Institutions and Mo

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As managers approach retirement, their career horizons become shorter and they might start to behave opportunistically by taking a more risk-averse and short-term orientation. Long-term risky investments, such as research and development, can suffer the most from this problem as their payoff comes long after CEOs retire. To mitigate such behavior, most executive compensation contracts include long-term performance incentives. In this study, we hypothesize that long-term debt-like compensation in the form of defined benefit pension can make the career horizon problem more severe. We empirically examine the impact of managerial opportunism, influenced by pension compensation, on the research and development investments. We find that on average UK CEOs do not curtail research and development as their career horizons become shorter. But, the defined-benefit pension component of executive compensation leads CEOs, who are closer to retirement, to decrease R&D investments. Our results imply that executive compensation contracts need to be appropriately adjusted when managers approach retirement.

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“…Ownership variables consist of (i) family; (ii) foreign; (iii) state; (iv) managerial; and (v) institutional. Following the previous literature on the decision to pay dividends and the determinants of dividend payout, we include a number of control variables in the decision to pay a dividend, that is, profitability; leverage (Hu and Kumar 2004); free cash flow (Eisdorfer et al 2015); size and market to book value (Fuller and Blau 2010); growth, size, risk, and age (Twu 2012); and tangibility and fixed charges (Aivazian et al 2003). 5 Following previous studies (e.g., Opler et al 1999;Harford et al 2008; Jiang and Lie 2016; El Kalak and Tosun 2019), for each year, we estimate the excess cash for firm i as the residual of the following cross-sectional regression:…”

Section: Baseline Modelsmentioning

confidence: 99%

The effects of ownership structure, sub-optimal cash holdings and investment inefficiency on dividend policy: evidence from Indonesia

Moin

Gűney

Kalak

2019

Rev Quant Finan Acc

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We investigate how a firm's decision to hold excessive cash or to overinvest could influence its dividend payout policy in Indonesia. Additionally, we examine the association between corporate ownership structure and cash dividends. Using a data set of Indonesian listed firms for the period from 1995 to 2014, we find that excessive cash holding (overinvestment) positively (negatively) affects a firm's likelihood of paying dividends. Also, we find that family, foreign, state and institutional ownership have significantly negative links with dividends, which suggests the signals of expropriation of firms' wealth by major shareholders. These findings strongly support the expropriation hypothesis that commonly applies to firms with higher level of concentration or to firms in a weak legal environment by which the rights of minority interests are put at risk by large shareholders.

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Do corporate managers skimp on shareholders' dividends to protect their own retirement funds?

Cited by 40 publications

References 35 publications

Firm's Dividend Decision i̇n Indonesia: Cater or Mature?

Firm's Dividend Decision i̇n Indonesia: Cater or Mature?

Do managers act opportunistically towards the end of their career?

The effects of ownership structure, sub-optimal cash holdings and investment inefficiency on dividend policy: evidence from Indonesia

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