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The impact of ultimate controller’s ownership on cash dividend policy based on a comparative analysis between owner-management and professional-management modes

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  • Song, Xiaobao
  • Yao, Mingan
  • Su, Wunhong
  • Lin, Danming

Abstract

This study uses Chinese listed firms to examine the relation between the ultimate controller’s ownership and cash dividends under different allocation modes of management rights. The empirical results show that under the professional-management mode, the ultimate controller’s ownership and dividend payments form an inverted U-shaped relation which results from the ultimate controller’s monitoring and collusion with the executive. Under the owner-management mode, the ultimate controller’s ownership and dividend payment levels assume a U-shaped relation which is attributed to its interest encroachment and convergence effect. The shape flip from professional-management to owner-management is the result of the changing opportunity cost of the controller’s dividend payments.

Suggested Citation

  • Song, Xiaobao & Yao, Mingan & Su, Wunhong & Lin, Danming, 2021. "The impact of ultimate controller’s ownership on cash dividend policy based on a comparative analysis between owner-management and professional-management modes," The North American Journal of Economics and Finance, Elsevier, vol. 57(C).
    • Handle: RePEc:eee:ecofin:v:57:y:2021:i:c:s1062940821000681
    DOI: 10.1016/j.najef.2021.101439
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    More about this item

    Keywords

    Ownership; Cash dividend; Professional-management; Owner-management;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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