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Dividends and Exploration

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  • Faccio, Mara
  • Lang, Larry H.P.
  • Leung, Joanne

Abstract

In Western Europe and East Asia capital markets require higher dividends from corporations tightly affiliated (at the 20% level of control) to a group and within a group from corporations whose controlling shareholder has a lower ratio O/C of ownership to control rights. For loosely-affiliated corporations (whose controlling shareholder holds between 10% and 20% of control rights) dividends are positively related to O/C reflecting expropriation not contained by capital markets. Such corporations comprise 2.94% of European corporations but 15.44 % of Asian corporations. In our 9 Asian economies the 11 largest groups at the 10% level comprise 53.75% of all corporations and 84.58% of loosely-affiliated corporations so most expropriation occurs here. Dividend are higher in Europe than in Asia; having multiple large shareholders increases dividends in Europe but decreases them in Asia.

Suggested Citation

  • Faccio, Mara & Lang, Larry H.P. & Leung, Joanne, 2000. "Dividends and Exploration," Working Paper Series 19016, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    • Handle: RePEc:vuw:vuwcsr:19016
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    File URL: https://ir.wgtn.ac.nz/handle/123456789/19016
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    References listed on IDEAS

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    Keywords

    dividends; Asian economies;

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