In this paper we try to better understand the adverse consequences of mandatory dividend rules. We identify two main reasons why firms may pay only the mandatory minimum dividend: financial constraints and private benefits. We also argue that the consequences of these rules for firms should...

We develop a simple model of investment in business groups subject to moral hazard. Our model suggests that productivity and pledgeable income are the drivers of resources in the internal capital markets of these groups. This prediction can be use to explain on the grounds of efficiency some...

In this paper we try to understand the adverse consequences of mandatory dividend rules. We identify two main reasons why firms pay only the mandatory dividend: financial constraints and private benefits. Using a sample of Brazilian companies, we found evidences that firms that pay only the...