Dividends and Expropriation
Mara Faccio, Larry H. P. Lang, Leslie Young
American Economic Review · 2001 · Volume 91 · Issue 1
Abstract
Whereas most U.S. corporations are widely held, the predominant form of ownership in East Asia is control by a family, which often supplies a top manager. These features of "crony capitalism" are actually more pronounced in Western Europe. In both regions, the salient agency problem is expropriation of outside shareholders by controlling shareholders. Dividends provide evidence on this. Group-affiliated corporations in Europe pay higher dividends than in Asia, dampening insider expropriation. Dividend rates are higher in Europe, but lower in Asia, when there are multiple large shareholders, suggesting that they dampen expropriation in Europe, but exacerbate it in Asia.
Keywords
Mergers, Acquisitions, Restructuring, Voting, Proxy Contests, Corporate Governance, Payout Policy, Economic Development: Financial Markets, Saving and Capital Investment, Corporate Finance and Governance
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