The effect of ownership concentration and composition on dividends: Evidence from Latin America |
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| Affiliation: | 1. INALDE Business School, Universidad de la Sabana, Autopista Norte Km. 7, Chía, Colombia;2. IESA Business School, Ave IESA, San Bernardino, Caracas, Venezuela;3. Paseka School of Business, Minnesota State University Moorhead, 1104 Seventh Ave South, Moorhead, MN, USA;4. Escuela de Administración Universidad Pedagógica y Tecnológica de Colombia (UPTC) Tunja, Colombia;5. Universidad de los Andes, Bogotá, Colombia |
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| Abstract: | We analyze a unique data set of publicly traded firms based in six Latin American countries to study the joint effect of ownership concentration and composition on dividend policy. We find that when ownership concentration is high and the largest investor is identified as an individual, firms tend to pay fewer dividends consistent with individual investors extracting benefits from minority shareholders. However, if the largest shareholder is based in a common law country, the dividend paid is significantly higher. Finally, greater ownership by the second largest shareholder decreases firm dividends suggesting the monitoring role of a large shareholder. |
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