PROTECTIONS TO SHAREHOLDER AND TO CREDITOR AND DIVIDEND POLICY: AN INTERNATIONAL ANALYSIS OF OUTCOME AND SUBSTITUTE MODELS
DOI:
https://doi.org/10.18028/rgfc.v10i3.8009Keywords:
Shareholder rights., Creditor rights., Dividends., Outcome model., Substitute model.Abstract
This article investigates the mechanisms of protection effects for the shareholder and the creditor on dividend policies, in the light of the outcome and substitution agency models. To support the formulated hypotheses, descriptive statistics, Tobit regressions and the Generalized Moments Method are developed. The empirical results, based on data from 18,607 companies from 40 countries, during the period from 2008 to 2017, suggest that firms located in countries with high shareholder protection and with better investment opportunities are less likely to pay dividends, as they do, indicating the effectiveness of the outcome and substitution models, from the shareholder perspective. From the creditor perspective, the results show that, in a condition of high protection, the creditor restricts the payment of the dividend of firms with greater investment opportunities and, when the debt is poorly protected, companies pay more dividends. Therefore, it is possible to infer that the rights of the shareholders, and not of the creditors, are consistent with the outcome and substitute models agency.
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