Does political economy reduce agency costs? Some evidence from dividend policies around the world

Political connections, institutional investors and dividend payouts in Malaysia

“…Consistent with prior studies such as Adjaoud and Ben-Amar's (2010), the lagged one-year of dividends is employed as a control variable, as firms attempt to maintain stable dividends over time (Lintner, 1965). Growth is the average growth rate of net sales in the previous five years ∑( Sales t /Sales t−1 for each of the last 5 years)/5, consistent with Choy et al (2011) and is expected to negatively influence dividend payouts because firms with higher growth have lower free cash flow and hence pay lower dividends (Jensen, 1986).…”

“…We Faccio (2006) and Johnson and Mitton (2003 Consistent with prior dividend studies (e.g. Choy et al, 2011;Barclay et al, 2009;La Porta et al, 2000), dividend is measured as: (1) dividend to total assets; (2) dividends to sales;…”

“…Since dividend payout is non-negative, the Tobit regression analysis is used and consistent with prior study such as Choy et al (2011).The Tobit regression model used to test the hypotheses is as follows, with the tests variables in bold: ---Insert Table 2 here--- ---Insert Table 3 here--- (2000) and How et al (2014). In our analyses in subsequent tables, the industry adjusted dividends to total assets (Ind Adj Div/ta) is used as a proxy for dividend payouts.…”

Political Uncertainty and Dividend Policy: Evidence from International Political Crises

“…For example, Edmans, Goldstein, and Jiang (2012) emphasize that most firm-related or financial variables are inappropriate for use in analyzing the true incentives for corporate decisions. Moreover, there are potential omitted variables that may simultaneously drive both the uncertainty of firms' future earnings and dividend payout policy.For example, changes in the taxation affect both cash flow uncertainty and corporate dividend decisions 3 For example, reduction in dividend payments is associated with increase in the investment which leads to larger risk exposure to the business cycle 4 Political crises are likely to cause changes in the perceived rare disaster probabilities (Berkman, Jacobsen, 1 firms respond to exogenous shocks, political crises provide a unique platform for investigating the role of country characteristics and for determining firms' various motives for dividend payout policy (see La Porta, Lopez-de-Silanes, Shleifer, and Vishny (2000) and Choy, Gul, and Yao (2011)).…”

The effect of managerial overconfidence on the market timing ability and post-buyback performance of open market repurchases

“…Claessens, Djankov, and Lang (2000) show that 49% of Taiwan companies with ultimate control at the 20% level use pyramid structures, and that 8.6% of firms in Taiwan have a certain amount of cross-ownership leading to the deviation between the controlling shareholders' cash flow rights and control rights and the severe expropriation of minority shareholders. Choy, Gul, and Yao (2011) characterize Taiwan as a country with high investor expropriation risk. We expect that corporate governance through strong board structure and ownership structure can lower the agency cost and mitigate the adverse impact of managerial overconfidence on the timing of OMRs.…”