University of Twente Student Theses
Ownership concentration & agency theory : Investigating the effect of large shareholders on corporate payout policy in Danish publicly listed companies
Benkert, C.L. (2020) Ownership concentration & agency theory : Investigating the effect of large shareholders on corporate payout policy in Danish publicly listed companies.
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| Abstract: | This study examines the effect of ownership concentration and different types of large shareholders on corporate payout policy in the Danish setting. Corporate payout is composed out of different combinations of dividends and share repurchases. I investigate both the likelihood of payout as well as the intensity. After lagging the independent variables by one year, the sample is comprised of 59 Danish non-financial, non-utility firms from 2014 to 2018. Using both logit and OLS regression, I find that ownership concentration has a robust convex relationship with dividend payout ratios and a robust concave relationship with the repurchase propensity and intensity. In terms of different shareholder types, I find that large financial institutional shareholders press for higher dividend ratios to mitigate agency conflicts due to them being active in monitoring the company. Also, an increase of voting rights held by large financial institutional shareholders results in a decreased likelihood of repurchases. Further, increased voting rights held by large insiders result in higher dividend payout ratios in the presence of other shareholder types, indicating a use of dividends by insiders to lessen agency problems and avoid expropriation of shareholders to strengthen their reputation. Large shareholders that are other companies are associated with less propensity to repurchase. Lastly, having multiple large shareholders increases the general payout ratio; they monitor each other using higher payout ratios to lessen expropriation of minor shareholders and private rent consumption of the other large shareholders, and thereby mitigate agency problems. |
| Item Type: | Essay (Master) |
| Faculty: | BMS: Behavioural, Management and Social Sciences |
| Subject: | 85 business administration, organizational science |
| Programme: | Business Administration MSc (60644) |
| Link to this item: | https://purl.utwente.nl/essays/85284 |
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