Bena, Jan and Hanousek, Jan (2006) Rent extraction by large shareholders: evidence using dividend policy in the Czech Republic. Discussion paper, 556. Financial Markets Group, London School of Economics and Political Science, London, UK.
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Using cross-sectional analysis of corporate dividend policy we show that large shareholders extract rents from firms and expropriate minority shareholders in the weak corporate governance environment of an emerging economy. By comparing dividends paid across varying corporate ownership struc- tures—concentration, type, and domicile of ownership—we quantify these effects and reveal that they are substantial. We find that the target payout ratio for firms with majority ownership is low but that the presence of a significant minority shareholder increases the target payout ratio and hence precludes a majority owner from extracting rent. In contrast to other studies from developed markets, our unique dataset from the Czech Republic for the period 1996-2003 permits us to take account of the endogeneity of ownership.
|Item Type:||Monograph (Discussion Paper)|
|Additional Information:||© 2006 The Authors|
|Uncontrolled Keywords:||Rent extraction, Large shareholders, Corporate governance, Dividend policy|
|Library of Congress subject classification:||H Social Sciences > HG Finance
H Social Sciences > HB Economic Theory
|Journal of Economic Literature Classification System:||G - Financial Economics > G3 - Corporate Finance and Governance > G35 - Payout Policy
G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure
D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior
|Sets:||Research centres and groups > Financial Markets Group (FMG)
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