Dividend policy, creditor rights, and the agency costs of debt

• 成果类型: Article
• 署名作者: Brockman, Paul; Unlu, Emre
• 署名单位: University of Missouri System; University of Missouri Columbia; University of Nebraska System; University of Nebraska Lincoln
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2008.03.007
• 发表日期: 2009
• 页码: 276-299
• 关键词: CREDITOR RIGHTS; Dividend policy; AGENCY COSTS

摘要

We show that country-level creditor rights influence dividend policies around the world by establishing the balance of power between debt and equity claimants. Creditors demand and managers consent to a more restrictive Payout policy as a substitute for weak creditor rights in an effort to minimize the firm's agency costs of debt. Using a sample of 120,507 firm-years from 52 countries, we find that both the probability and amount of dividend payouts are significantly lower in countries with poor creditor rights. A reduction in the creditor rights index from its highest value to its lowest value implies a 41% reduction in the probability of paying a dividend, and a 60% reduction in dividend payout ratios. These results are robust to numerous control variables, sample variations, model specifications, and alternative hypotheses. We also show that the agency costs of debt play a more decisive role in determining dividend policies than the previously documented agency costs of equity. Overall, our findings contribute to the growing literature arguing that creditors exert significant influence over corporate decision-making outside of bankruptcy. (C) 2009 Elsevier B.V. All rights reserved.