Ownership structure and dividend policy: Evidence from Italian firms

Luciana Mancinelli, Aydin Ozkan

Research output: Contribution to journalArticle

50 Citations (Scopus)

Abstract

This paper reports on empirical investigations into the relationship between dividend policy and ownership structure of firms, using a sample of 139 listed Italian companies. Ownership structure in Italy is highly concentrated and hence the relevant agency problem to analyse seems to be the one that arises from the conflicting interests of large shareholders and minority shareholders. This paper therefore attempts to test the rent extraction hypothesis by relating the firm's dividend payout ratio to various ownership variables, which measure the degree of concentration in terms of the voting rights of large shareholders. The hypothesis that other non-controlling large shareholders may have incentives to monitor the largest shareholder is also tested. The results of the empirical analysis reveal that firms make lower dividend payouts as the voting rights of the largest shareholder increase. Results also suggest that the presence of agreements among large shareholders might explain the limited monitoring power of other 'strong ' non-controlling shareholders.

LanguageEnglish
Pages265-282
Number of pages18
JournalEuropean Journal of Finance
Volume12
Issue number3
DOIs
Publication statusPublished - 1 Apr 2006
Externally publishedYes

Fingerprint

Ownership structure
Large shareholders
Dividend policy
Voting rights
Italy
Ownership
Empirical investigation
Agency problems
Dividends
Empirical analysis
Monitoring
Rent extraction
Minority shareholders
Shareholders
Incentives
Dividend payout
Listed companies

Cite this

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Ownership structure and dividend policy : Evidence from Italian firms. / Mancinelli, Luciana; Ozkan, Aydin.

In: European Journal of Finance, Vol. 12, No. 3, 01.04.2006, p. 265-282.

Research output: Contribution to journalArticle

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