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Creditor rights, culture and dividend payout policy

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  • Byrne, Julie
  • O’Connor, Thomas

Abstract

We study how creditor rights and culture interact with one another to influence corporate dividend payout policy. Where creditor rights are strong, creditors accept the status quo, which are large dividends in individualist and small dividends in collectivist traditions, respectively. Culture influences dividend payout where creditor rights are weak. In collectivist countries where group cohesion among corporate stakeholders results in perceived lower agency costs of debt and equity, creditors place few if any restrictions on dividend payout given weak creditor rights. In contrast, in individualist traditions, creditors continue to restrict dividend payouts under weak creditor rights. Our findings emphasize the importance of accounting for the interactions between creditor rights and culture in determining dividend policy.

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  • Byrne, Julie & O’Connor, Thomas, 2017. "Creditor rights, culture and dividend payout policy," Journal of Multinational Financial Management, Elsevier, vol. 39(C), pages 60-77.
    • Handle: RePEc:eee:mulfin:v:39:y:2017:i:c:p:60-77
    DOI: 10.1016/j.mulfin.2016.12.002
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    Cited by:

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    4. Tahir, Muhammad & Ibrahim, Haslindar & Zulkafli, Abdul Hadi & Mushtaq, Muhammad, 2020. "Corruption, national culture, law and dividend repatriation policy," Journal of Multinational Financial Management, Elsevier, vol. 57.
    5. Byrne, Julie & O'Connor, Thomas, 2017. "How do creditors respond to disclosure quality? Evidence from corporate dividend payouts," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 49(C), pages 154-172.
    6. Khiar, Mohamed Nasrallah & Kooli, Maher, 2024. "Culture and exit mechanisms: International evidence," Global Finance Journal, Elsevier, vol. 61(C).
    7. Duqi, Andi & Jaafar, Aziz & Warsame, Mohammed H., 2020. "Payout policy and ownership structure: The case of Islamic and conventional banks," The British Accounting Review, Elsevier, vol. 52(1).
    8. Olarewaju Odunayo Magret & Migiro Stephen Oseko & Sibanda Mabutho, 2018. "Dividend Payout, Retention Policy and Financial Performance in Commercial Banks: Any Causal Relationship?," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 63(1), pages 37-62, April.
    9. Wu, Manhwa & Ni, Yensen & Huang, Paoyu, 2020. "Dividend payouts and family-controlled firms—The effect of culture on business," The Quarterly Review of Economics and Finance, Elsevier, vol. 75(C), pages 221-228.
    10. Khalfan, Twahir M. & Wendt, Stefan, 2020. "The impact of ownership concentration on payout across Nordic firms," Journal of Multinational Financial Management, Elsevier, vol. 56(C).

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    More about this item

    Keywords

    National culture; Creditor rights; Dividend policy;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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