Abstract
Motivated by agency theory, we explore the potential impact of managerial entrenchment through staggered boards on dividend policy. The evidence suggests that firms with staggered boards are more likely to pay dividends. Among firms that pay dividends, those with staggered boards pay larger dividends. We also show that the impact of staggered boards on dividend payouts is substantially stronger (as much as two to three times larger) than the effect of all other corporate governance provisions combined. Overall, the evidence is consistent with the notion that dividends help alleviate agency conflicts. Thus, firms more vulnerable to managerial entrenchment, i.e., firms with staggered boards, rely more on dividends to mitigate agency costs. Aware of potential endogeneity, we demonstrate that staggered boards likely bring about, and are not merely associated with, larger dividend payouts. Our results are important, as they show that certain governance provisions have considerably more influence than others on critical corporate activities such as dividend payout decisions.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 1-19 |
| Number of pages | 19 |
| Journal | Journal of Financial Services Research |
| Volume | 36 |
| Issue number | 1 |
| DOIs | |
| State | Published - May 18 2009 |
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All Science Journal Classification (ASJC) codes
- Accounting
- Finance
- Economics and Econometrics
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Staggered boards, managerial entrenchment, and dividend policy. / Jiraporn, Pornsit; Chintrakarn, Pandej.
In: Journal of Financial Services Research, Vol. 36, No. 1, 18.05.2009, p. 1-19.Research output: Contribution to journal › Article
TY - JOUR
T1 - Staggered boards, managerial entrenchment, and dividend policy
AU - Jiraporn, Pornsit
AU - Chintrakarn, Pandej
PY - 2009/5/18
Y1 - 2009/5/18
N2 - Motivated by agency theory, we explore the potential impact of managerial entrenchment through staggered boards on dividend policy. The evidence suggests that firms with staggered boards are more likely to pay dividends. Among firms that pay dividends, those with staggered boards pay larger dividends. We also show that the impact of staggered boards on dividend payouts is substantially stronger (as much as two to three times larger) than the effect of all other corporate governance provisions combined. Overall, the evidence is consistent with the notion that dividends help alleviate agency conflicts. Thus, firms more vulnerable to managerial entrenchment, i.e., firms with staggered boards, rely more on dividends to mitigate agency costs. Aware of potential endogeneity, we demonstrate that staggered boards likely bring about, and are not merely associated with, larger dividend payouts. Our results are important, as they show that certain governance provisions have considerably more influence than others on critical corporate activities such as dividend payout decisions.
AB - Motivated by agency theory, we explore the potential impact of managerial entrenchment through staggered boards on dividend policy. The evidence suggests that firms with staggered boards are more likely to pay dividends. Among firms that pay dividends, those with staggered boards pay larger dividends. We also show that the impact of staggered boards on dividend payouts is substantially stronger (as much as two to three times larger) than the effect of all other corporate governance provisions combined. Overall, the evidence is consistent with the notion that dividends help alleviate agency conflicts. Thus, firms more vulnerable to managerial entrenchment, i.e., firms with staggered boards, rely more on dividends to mitigate agency costs. Aware of potential endogeneity, we demonstrate that staggered boards likely bring about, and are not merely associated with, larger dividend payouts. Our results are important, as they show that certain governance provisions have considerably more influence than others on critical corporate activities such as dividend payout decisions.
UR - http://www.scopus.com/inward/record.url?scp=65649111765&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=65649111765&partnerID=8YFLogxK
U2 - 10.1007/s10693-009-0059-6
DO - 10.1007/s10693-009-0059-6
M3 - Article
AN - SCOPUS:65649111765
VL - 36
SP - 1
EP - 19
JO - Journal of Financial Services Research
JF - Journal of Financial Services Research
SN - 0920-8550
IS - 1
ER -