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The Determinants of Dividend Payment: the Effect of the Legal and Contractual Obligatory Minimum in Brazilian Companies

Author

Listed:
  • Daniel Francisco Vancin

    (Universidade Federal do Rio Grande do Sul)

  • Jairo Laser Procianoy

    (Universidade Federal do Rio Grande do Sul Universidade do Vale do Rio dos Sinos)

Abstract

This study seeks to identify the effects of the mandatory dividend in determinants of companies listed on the BM&FBovespa to pay dividends, demonstrating that the methodology proposed is a step forward in the pursuit of these determinants, mirroring the reality of actual willingness to pay. To accomplish this was used a tobit model with instrumental variables, separating the sample into three groups: the Complete Sample, ABOVE group and MINIMUM group. In total, were analyzed 1531 dividend distributions from 2007 to 2013. It was found that there is strong empirical evidence that companies paying dividends above the mandatory feature different determinants of those who only pay this. Thus, the existence of companies in the sample who pay only the mandatory dividend influence on the regression coefficients, resulting in significant biases for dividend determinants in Brazil. Because companies that pay above mandatory are the real makers of the decision to pay dividends, as companies only pay the mandatory simply comply with the legislation.

Suggested Citation

  • Daniel Francisco Vancin & Jairo Laser Procianoy, 2016. "The Determinants of Dividend Payment: the Effect of the Legal and Contractual Obligatory Minimum in Brazilian Companies," Brazilian Review of Finance, Brazilian Society of Finance, vol. 14(1), pages 89-123.
    • Handle: RePEc:brf:journl:v:14:y:2016:i:1:p:89-123
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    More about this item

    Keywords

    dividend; law; Brazil; ; dividend; law; Brazil;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)

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