Dividend Policy with Controlling Shareholders

Dividend Policy with Controlling Shareholders

María Isabel Saez, María Gutiérrez Urtiaga

Series number :

Serial Number: 

Date posted :

March 01 2014

Last revised :

March 31 2014
SSRN Share


  • Corporate governance • 
  • ownership structure • 
  • corporation law • 
  • controlling shareholders • 
  • minority expropriation • 
  • payout policy • 
  • dividends

This Article investigates the determinants of dividend policy in firms with concentrated ownership structure. A review of the empirical literature shows that dividend payout ratios are lower in firms with controlling shareholders.

We explain this finding as a consequence of the legal rules governing cash distributions, which leave the dividend decision in the hands of the firm insiders, and the lack of monitoring mechanisms for checking the power of controlling shareholders. The analysis of the empirical evidence on dividend policy points out to the existence of an unresolved agency conflict between controlling shareholders and outside investors. We conclude that controlling shareholders are currently using the dividend policy to expropriate minority shareholders.


Real name:
María Isabel Saez