Dividend policy: Shareholder rights and creditor rights under the impact of the global financial crisis |
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| Affiliation: | 1. University of Connecticut, United States;2. University of New Mexico, United States;1. Istanbul Stock Exchange, and Koc University, Turkey;2. Driehaus College of Business, DePaul University, United States;3. Rowe School of Business, Dalhousie University, Canada;1. Department of Finance, Albers School of Business and Economics, Seattle University, 901 12th Avenue, P.O. Box 222000, Seattle WA 98122, United States;2. Hanken School of Economics, Department of Finance and Statistics, P.O. Box 470, 00101 Helsinki, Finland;3. Department of Accounting, Albers School of Business and Economics, Seattle University, 901 12th Avenue, P.O. Box 222000, Seattle WA 98122, United States |
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| Abstract: | The extant literature shows that shareholder and creditor rights positively affect corporate payout policy in a static macroeconomic environment. This study examines how the effects of shareholder and creditor rights on dividend policy change under the impact of the global financial crisis. We posit that this exogenous shock increases agency costs of both shareholders and creditors. With a sample of 133,631 firm-year observations from 23,890 firms incorporated in 41 countries, we find that both shareholder and creditor rights are less effective in dividend decisions in the post-crisis period and the extent of shareholder (creditor) expropriation in the post-crisis period is larger when creditors (shareholders) are adequately protected. |
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