How does ownership structure affect the financing and dividend decisions of firm?

Abstract

Purpose Ownership structure deals with internal corporate governance mechanism, which plays important role in minimizing conflict of interests between shareholders and management Ownership structure is an important mechanism that influences the value of firm, financing and dividend decisions. This paper aims to examine the impact of the ownership structures, i.e. managerial ownership, institutional ownership on financing and dividend policy. Design/methodology/approach The authors use panel data of manufacturing firms from both developed and developing countries, and the generalized method of moments (GMM) is applied to analyze the results. The authors collect the data from DataStream for the period of 2010 to 2019. Findings The authors find that managerial ownership and ownership concentration have significant and positive effects on debt financing, but they have significant and negative effects on dividend policy. Institutional ownership shows a positive impact on financing decisions and dividend policy for sample firms. Originality/value This study fills the gap by proving the policy implications for both firms and investors, as managers prefer debt financing, but at the same time try to ignore dividend payment. Therefore, investors may not invest in firms with a higher proportion of managerial ownership and may choose to invest more in institutional ownership, which lowers the agency cost.

Corporate diversification and debt financing: Do family shareholders protect their control rights?

“…Next, the second set of control variables depicted the corporate governance set variables such as board size (BS) (number of directors on the board) and board independence (IDR) (number of independent directors in the board). Corporate governance variables could influence the financing decision of firms and their business activities (González & García‐Meca, 2014; Tayachi et al, 2021). Lastly, two dummy variables associated with the industries operated in by the sample firms (Dummy_Industry) and the years used in the study (Dummy_Year) were used to estimate the study's models.…”

“…In the viewpoint of SEW, it is possible to address the role of family shareholders to determine the business' funding source (Tayachi et al, 2021). Given that family‐centred interests strongly bound family shareholders, they controlled the board of firms to optimise the family SEW (Comino‐Jurado et al, 2021).…”

Pengaruh Struktur Kepemilikan dan Karakteristik Dewan Direksi terhadap Kebijakan Pembayaran Dividen Perusahaan Manufaktur di Indonesia

“…Struktur kepemilikan memiliki peran penting dalam mempengaruhi nilai perusahaan dan keputusan pembiyaan dan bahkan membantu mengurangi risiko kebangkrutan. Struktur kepemilikan dan penerapan kebijakan dividen yang tepat dapat melindungi hak pemegang saham dan membangun mekanisme yang memastikan bahwa manajer perusahaan menggunakan keuntungan untuk tujuan investasi secara efisien (Tayachi et al, 2022). Sebagian besar perusahaan di negara-negara berkembang mengalami permasalahan kelembagaan seperti struktur kepemilikan yang terkonsentrasi, tingkat transparansi perusahaan yang rendah, dan perlindungan investor yang lemah.…”

“…Kebijakan terhadap pembagian dividen merupakan kewajiban bagi suatu perusahaan guna untuk meningkatkan tingkat kemakmuran dari pemegang saham. Perusahaan sering kali dikelola oleh manajemen perusahaan dan bukan pemegang saham, yang menunjuk dan melakukan pemberdayaan manajer untuk melindungi kepentingan perusahaan dan memaksimalkan keuntungan para pemegang saham (Tayachi et al, 2022). Tujuan penelitian ini adalah untuk menganalisis apakah terdapat pengaruh struktur kepemilikan dan dewan direksi perusahaan terhadap kebijakan dividen serta apakah terdapat pengaruh variable kontrol, seperti Firm Age, Financial Leverage, dan Firm Size terhadap kebijakan dividen.…”

Does Short-Term Debt increase Profitability? The Role of Corporate Governance as a Moderating Variable

“…According to (DePamphilis, 2022) internal fundings are normally preferred by the business, but as the business grows the options from external fundings, namely through debt financing are also an available choice. According to (Tayachi et al, 2022) internal sources of funds are obtained from the company's retained earnings and external sources of funds can come from debt or loans and capital from the owners (shareholders). When a company uses debt, it means that the company has done financial leverage.…”