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Is payout policy part of the corporate governance system? The case of France

Author

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  • Céline Du Boys

    (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon)

Abstract

This paper examines the place of payout policies in governance systems. It analyses the conditions in which payout is used to regulate agency conflicts and studies the relations between dividend or share repurchase and the other governance mechanisms. Through the study of 167 French firms from 2000 to 2005, the author shows that in France payout is not used to regulate conflicts between majority and minority shareholders, but rather to limit free cash flow risk or conflict between managers and shareholders. In presence of a majority shareholder, the governance systems do not achieve in forcing insiders to disgorge cash. The study confirms the substitutability between debt and payout and shows that blockholders have an effect on payout. On the contrary, the board's characteristics, except the directors' independence, do not influence payout. Biographical notes: Céline du Boys is a researcher in management and finance at Aix Marseille University (CERGAM), France. She received her PhD in 2007 in finance. Her research interests include corporate finance, payout policies, corporate governance and stakeholder theory. 1 Payout and governance: a theoretical study This paper aims at analysing the corporate governance role of payout policy and understanding its place in the governance system. In theory, dividend and share repurchase can reduce agency conflicts, but are they really used as governance mechanisms? Moreover, their place in the governance systems has not been really analysed yet. This paper seeks to make up for this gap. First, it studies the governance role of payout and analyses the conflicts it can regulate: conflicts between managers and shareholders and between majority and minority shareholders.

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  • Céline Du Boys, 2009. "Is payout policy part of the corporate governance system? The case of France," Post-Print hal-01290737, HAL.
    • Handle: RePEc:hal:journl:hal-01290737
    Note: View the original document on HAL open archive server: https://hal.science/hal-01290737
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    References listed on IDEAS

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    Cited by:

    1. Patrice Charlier & Céline Duboys, 2011. "Gouvernance familiale et politique de distribution aux actionnaires," Revue Finance Contrôle Stratégie, revues.org, vol. 14(1), pages 5-31., March.
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    3. Patrice Charlier & Céline Du Boys, 2011. "Family governance and payout policies to shareholders [Gouvernance familiale et politique de distribution aux actionnaires]," Post-Print hal-01470330, HAL.
    4. Elena Merino & Montserrat Manzaneque & Alba Maria Priego, 2013. "“Board independence” and compensation structure of directors," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 2(2), pages 125-152.

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