Dividends and expropriation

Mara Faccio; Larry H P Lang; Leslie Young

doi:10.1257/aer.91.1.54

Dividends and expropriation

Mara Faccio, Larry H P Lang, Leslie Young

Accounting and Finance division

Research output: Contribution to journal › Article › peer-review

Abstract

Whereas most U.S. corporations are widely held, the predominant form of ownership in East Asia is control by a family, which often supplies a top manager. These features of "crony capitalism" are actually more pronounced in Western Europe. In both regions, the salient agency problem is expropriation of outside shareholders by controlling shareholders. Dividends provide evidence on this. Group-affiliated corporations in Europe pay higher dividends than in Asia, dampening insider expropriation. Dividend rates are higher in Europe, but lower in Asia, when there are multiple large shareholders, suggesting that they dampen expropriation in Europe, but exacerbate it in Asia. (JEL G34, G35).

Original language	English
Pages (from-to)	54-78
Number of pages	24
Journal	The American Economic Review
Volume	91
Issue number	1
DOIs	https://doi.org/10.1257/aer.91.1.54
Publication status	Published - Mar 2001

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title = "Dividends and expropriation",

abstract = "Whereas most U.S. corporations are widely held, the predominant form of ownership in East Asia is control by a family, which often supplies a top manager. These features of {"}crony capitalism{"} are actually more pronounced in Western Europe. In both regions, the salient agency problem is expropriation of outside shareholders by controlling shareholders. Dividends provide evidence on this. Group-affiliated corporations in Europe pay higher dividends than in Asia, dampening insider expropriation. Dividend rates are higher in Europe, but lower in Asia, when there are multiple large shareholders, suggesting that they dampen expropriation in Europe, but exacerbate it in Asia. (JEL G34, G35).",

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AU - Lang, Larry H P

AU - Young, Leslie

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AB - Whereas most U.S. corporations are widely held, the predominant form of ownership in East Asia is control by a family, which often supplies a top manager. These features of "crony capitalism" are actually more pronounced in Western Europe. In both regions, the salient agency problem is expropriation of outside shareholders by controlling shareholders. Dividends provide evidence on this. Group-affiliated corporations in Europe pay higher dividends than in Asia, dampening insider expropriation. Dividend rates are higher in Europe, but lower in Asia, when there are multiple large shareholders, suggesting that they dampen expropriation in Europe, but exacerbate it in Asia. (JEL G34, G35).

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JO - The American Economic Review

JF - The American Economic Review

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Dividends and expropriation

Abstract

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