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How product market competition affects dividend payments in a weak investor protection economy: Evidence from Taiwan

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  • Kao, Lanfeng
  • Chen, Anlin

Abstract

We examine the link between the intensity of product market competition and the dividend models of agency conflicts in an economy with weak investor protection (Taiwan). Product market competition can substitute for governance mechanisms. Our results show that the outcome agency model of dividends is applicable only when the product market is highly competitive. However, the substitute agency model of dividends is supported when the product market has low competitiveness. Product market competition alleviates the effects of agency conflicts and corporate governance practices on dividend policies.

Suggested Citation

  • Kao, Lanfeng & Chen, Anlin, 2013. "How product market competition affects dividend payments in a weak investor protection economy: Evidence from Taiwan," Pacific-Basin Finance Journal, Elsevier, vol. 25(C), pages 21-39.
    • Handle: RePEc:eee:pacfin:v:25:y:2013:i:c:p:21-39
    DOI: 10.1016/j.pacfin.2013.08.004
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    Cited by:

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    More about this item

    Keywords

    Agency conflict; Corporate governance; Dividend policy; Investor protection; Product market competition;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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