| Summary: | 碩士 === 國立政治大學 === 財務管理研究所 === 92 === We use a sample of companies from 32 countries around the world to shed light on the relationship between dividend payouts and insider holdings. Schooley and Barney (1994) indicate that negative relationship between dividend payouts and ownership exists before a turning point; once managerial ownership exceeds the turning point, it switches to a positive one. Also, as La Porta et al. (2000) point out, legal protection causes that widely-held firms dominate in a protected environment and closely-held firms in an unprotected one. So, most research addresses a negative relationship between dividend payouts and ownership. It is because their samples are usually composed of firms in a protected environment, where widely-held firms are the normality.
By contrast, in countries with poor shareholder protection, closely-held companies prevail, and most of their ownership is coupled with control. Dividends thus become a tool for controlling shareholders to signal the moderation of expropriation and to reduce agency costs. Because firms with more concentrated ownership have less cost to pay dividends and need to allay the concerns about expropriation, it implies that more dividends are paid as the insider holdings increase. We surmise a positive relationship between ownership and payouts can be observed in an unprotected environment. The empirical evidence supports our hypothesis.
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