Peer-Reviewed Journal Details
Mandatory Fields
Byrne, J. and T. O'Connor.
2012
May
Quarterly Review of Economics and Finance
Creditor rights and the outcome model of dividends
Published
()
Optional Fields
Corporate governance Creditor rights Dividend policy Shareholder rights
52
2
227
242
Using 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. © 2012 The Board of Trustees of the University of Illinois.
1062-9769
10.1016/j.qref.2012.04.002
Grant Details