Corporate payouts in dual classes
Purpose: The purpose of this paper is to examine the dividend payments and share repurchases of dual-class firms that have both their superior voting shares and inferior voting shares publicly traded. Design/methodology/approach: This paper uses matched dual-class and single-class samples from 1994 to 2015 and logit models to evaluate the likelihoods of dividend payment and share repurchase between dual-class firms and single-class firms. Findings: The results show that dual-class firms are more likely than the matched sample of single-class firms to pay dividends in both share classes. Dual-class firms, however, are more likely to repurchase their superior shares than single-class firms and their inferior shares. Research limitations/implications: The results suggest that dual-class firms do not use corporate payouts to either mitigate agency problems or maintain the private benefits of control. Instead, dual-class firms use dividend payments to mitigate agency problems while using repurchases of superior shares to maintain the private benefits of control, which supports the agency payout hypothesis. Practical implications: This paper highlights the differences between dividend payments and share repurchases as forms of corporate payouts and suggests that firms may choose a particular form for a particular purpose. Originality/value: This paper provides the first piece of empirical evidence on the corporate payouts of dual-class firms separating their superior voting shares and inferior voting shares.
Year of publication: |
2019
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---|---|
Authors: | Lei, Adam Y.C. ; Li, Huihua ; Yu, Jin |
Published in: |
Managerial Finance. - Emerald, ISSN 0307-4358, ZDB-ID 2047612-7. - Vol. 45.2019, 12 (02.12.), p. 1542-1562
|
Publisher: |
Emerald |
Saved in:
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