O'Connor, Thomas and Byrne, Julie
Shareholder and creditor legal rights and the outcome model of dividends. Economics Finance & Accounting Working Paper Series N225-12.
National University of Ireland Maynooth.
In a sample of 22,374 firms from 35 countries, we examine the role of creditor rights, shareholder rights, and corporate governance in determining corporate dividend policy. We find that, while all three variables play a significant role in determining both the likelihood and the dividend amount, the effect of country-level creditor rights dominate. In subsequent analysis, we show that the outcome model is most effective in countries with strong creditor rights. When creditor rights are weak, creditors demand, and firms consent to lower dividends. These findings show that creditors, and not shareholders, exert the greatest influence over corporate dividend policy.
||Dividend policy; creditor rights; shareholder rights; corporate governance; Working Paper N225-12;
||Faculty of Social Sciences > Economics, Finance and Accounting
Ms Sandra Doherty
||14 Aug 2012 15:40
||National University of Ireland Maynooth
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