How do powerful CEOs view dividends and stock repurchases? Evidence from the CEO pay slice (CPS)
| Autor: | Shenghui Tong, Pornsit Jiraporn, Pattanaporn Chatjuthamard, Pandej Chintrakarn |
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| Rok vydání: | 2018 |
| Předmět: |
Economics and Econometrics
050208 finance ComputingMilieux_THECOMPUTINGPROFESSION Free cash flow 05 social sciences Principal–agent problem ComputingMilieux_LEGALASPECTSOFCOMPUTING Dividend policy Monetary economics GeneralLiterature_MISCELLANEOUS ComputingMilieux_MANAGEMENTOFCOMPUTINGANDINFORMATIONSYSTEMS 0502 economics and business Economics Dividend 050207 economics Finance Stock (geology) |
| Zdroj: | International Review of Economics & Finance. 58:49-64 |
| ISSN: | 1059-0560 |
| DOI: | 10.1016/j.iref.2018.02.023 |
| Popis: | Agency theory suggests that CEOs view dividends unfavorably because dividend payouts deprive them of the free cash flow they could otherwise exploit. Using Bebchuk, Cremers, and Peyer’s (2011) CEO pay slice (CPS) to measure CEO power, we find that an increase in CEO power by one standard deviation decreases the probability of paying dividends by 17.48%. For dividend-paying firms, a rise in CEO power by one standard deviation reduces the size of dividend payouts by 5.91%. Share repurchases, however, are not influenced by CEO power, although they too take away the free cash flow from the CEO. |
| Databáze: | OpenAIRE |
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