The Impact of Ownership Concentration and Shareholder Identity on Dividend Payout Probabilities : New Evidence from the German Stock Market

Numerous studies analyze the impact of ownership concentration and shareholder identity on dividend payout probabilities. In this paper, we seek to provide additional information about the importance different ownership proxies have for dividend payments. Because the importance of those proxies varies with the classification techniques applied, we use both traditional and machine learning techniques. We examine the dividend payout behavior of German issuers, which is considered rather flexible in terms of its distribution frequencies and dividend yields compared to international practice. Our sample period covers the years 2007 to 2014. Despite considerable differences in the classification techniques applied, we find that previous years' dividend payments, corporate profitability and firm size are consistently the most important firm-specific determinants of dividend payout probabilities. Only the largest shareholders with equity stakes that are either between 25% and 50% or above 50% rank among the most important variables. The impact is non-linear. When controlling for shareholders' identities, we find that both financial institutional and managerial ownership are especially important. Taking the location of institutional investors into account, only foreign financial investors influence payout probabilities