The effect of the board composition on dividends: The case of Brazilian and Chilean family firms
Based on the agency theory, this paper analyzes whether family firms pay more dividends compared to no-family firms and identifies whether the board composition affects the dividend policy. Brazil and Chile have established mandatory dividends, retain lower cash holdings, pay higher dividends compar...
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| Published in | European Journal of Family Business (EJFB) Vol. 10; no. 2; pp. 43 - 60 |
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| Main Authors | , , |
| Format | Journal Article |
| Language | English |
| Published |
Málaga
UMA Editorial, Universidad de Málaga
01.01.2020
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| Subjects | |
| Online Access | Get full text |
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| Abstract | Based on the agency theory, this paper analyzes whether family firms pay more dividends compared to no-family firms and identifies whether the board composition affects the dividend policy. Brazil and Chile have established mandatory dividends, retain lower cash holdings, pay higher dividends compared with other markets in the region. The sample of study is composed by 853 observations from 49 Brazilian and 32 Chilean top publicly listed firms in terms of market capitalization over the 11-year period from 2004 to 2014. Using an unbalanced panel data, results indicate that family controlled firms distribute more dividends and board composition namely; board size and the proportion of women on the board have a significant and positive impact on the dividend policy of the firm. By contrast, COB-CEO duality has a negative effect. Thus, dividend policy constitutes an effective corporate governance mechanism in mitigating the family' expropriation of minority shareholders' wealth. |
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| AbstractList | Based on the agency theory, this paper analyzes whether family firms pay more dividends compared to no-family firms and identifies whether the board composition affects the dividend policy. Brazil and Chile have established mandatory dividends, retain lower cash holdings, pay higher dividends compared with other markets in the region. The sample of study is composed by 853 observations from 49 Brazilian and 32 Chilean top publicly listed firms in terms of market capitalization over the 11-year period from 2004 to 2014. Using an unbalanced panel data, results indicate that family controlled firms distribute more dividends and board composition namely; board size and the proportion of women on the board have a significant and positive impact on the dividend policy of the firm. By contrast, COB-CEO duality has a negative effect. Thus, dividend policy constitutes an effective corporate governance mechanism in mitigating the family' expropriation of minority shareholders' wealth. Based on the agency theory, this paper analyzes whether family firms pay more dividends compared to no-family firms and identifies whether the board composition affects the dividend policy. Brazil and Chile have established mandatory dividends, retain lower cash holdings, pay higher dividends compared with other markets in the region. The sample of study is composed by 853 observations from 49 Brazilian and 32 Chilean top publicly listed firms in terms of market capitalization over the 11-year period from 2004 to 2014. Using an unbalanced panel data, results indicate that family controlled firms distribute more dividends and board composition namely; board size and the proportion of women on the board have a significant and positive impact on the dividend policy of the firm. By contrast, COB-CEO duality has a negative effect. Thus, dividend policy constitutes an effective corporate governance mechanism in mitigating the family’ expropriation of minority shareholders’ wealth. Basado en la teoría de la agencia, este documento analiza si las empresas familiares pagan más dividendos en comparación con las empresas no familiares e identifica si la com - posición de la junta directiva afecta la política de dividendos. Brasil y Chile han establecido dividendos obligatorios, mantienen menores tenencias de efectivo y pagan dividendos más altos en comparación con otros mercados de la región. La muestra del estudio está compu- esta por 853 observaciones de 49 empresas brasileñas y 32 chilenas principales que cotizan en bolsa en términos de capitalización de mercado durante el período de 11 años de 2004 a 2014. Utilizando datos de panel no balanceados, los resultados indican que las empresas controla- das por la familia distribuyen más dividendos y composición de la junta, a saber, el tamaño del directorio y la proporción de mujeres en el directorio tienen un impacto significativo y positivo en la política de dividendos de la empresa. Por el contrario, la dualidad Chairman of Board - Chief Executive Office (COB-CEO) tiene un efecto negativo. Por lo tanto, la política de dividendos constituye un mecanismo de gobierno corporativo eficaz para mitigar la expro - piación familiar de la riqueza de los accionistas minoritarios. |
| Author | Fassler, Karen Watkins Briano-Turrent, Guadalupe del Carmen Puente-Esparza, Martha Luisa |
| Author_xml | – sequence: 1 givenname: Guadalupe del Carmen surname: Briano-Turrent fullname: Briano-Turrent, Guadalupe del Carmen – sequence: 2 givenname: Karen Watkins surname: Fassler fullname: Fassler, Karen Watkins – sequence: 3 givenname: Martha Luisa surname: Puente-Esparza fullname: Puente-Esparza, Martha Luisa |
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| SubjectTerms | Agency Theory Board Composition Dividend Policy Family Firms Latin America |
| Title | The effect of the board composition on dividends: The case of Brazilian and Chilean family firms |
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