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http://dx.doi.org/10.13106/jafeb.2022.vol9.no9.0061

Family Ownership and Dividend Policy: Evidence from India  

RAJVERMA, Abhinav (Institute of Rural Management Anand (IRMA))
MISRA, Arun Kumar (Indian Institute of Management (IIM))
KUMAR, Gaurav (Jaipuria Institute of Management)
Publication Information
The Journal of Asian Finance, Economics and Business / v.9, no.9, 2022 , pp. 61-73 More about this Journal
Abstract
The article examines the ownership structure and dividend payout behavior of India-listed firms using a panel regression approach. It focuses on family ownership and examines why dividend payouts of family firms differ from non-family firms. The study finds that family firms dominate and have concentrated ownership using data from the NSE-listed regular dividend-paying firms. Although family ownership concentration is high among Indian firms, these firms are not concerned about distributing cash as dividends. Instead, these firms focus on retaining and passing on control from one generation to the next. The evidence shows that family firms pay low dividends and have higher leverage than non-family counterparts. The results support the entrenchment of minority shareholders and the proposition that a high payout signals a reduction in the information asymmetry and level of risk. The study further illustrates that cash dividends tend to reduce the level of risk perceived; however, (cash dividend) leads to the deterioration firm's liquidity and aid in the shrinking of cash among emerging market firms. The originality of the paper lies in factoring ownership concentration while explaining the dividend behaviour from an emerging markets perspective, characterized by high private benefits and weak protection for external minority shareholders.
Keywords
Dividend Policy; Family Firms; Ownership Structure; Emerging Market;
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Times Cited By KSCI : 3  (Citation Analysis)
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