Dividend Policy and Ownership Structures in Swedish Firms

Abstract: The purpose of this thesis is to investigate the dividend policy of Swedish firms by employing an agency framework. The study data, containing accounting data for all Swedish companies and ownership data for all listed companies, is collected from the Ägarna och Makten and the MM Partners databases. OLS regressions are then employed on the study variables. I find that a) companies controlled by shareholders holding a notably larger proportion of the votes than the equity do not have significantly different dividend levels or propensity to pay dividend than other firms; b) listed companies have significantly higher dividend levels and propensity to pay dividend than non-listed companies; c) leverage is not related to dividends levels or to the propensity to pay dividend; d) the votes of the largest shareholder are not related to dividend levels but significantly positively related to the propensity to pay dividend; e) the type of the controlling shareholder does not seem to have a significant effect on dividend levels, but companies controlled by families or institutions have significantly higher propensity to pay dividend than other companies; f) companies with more than one large shareholder do not generally have higher dividend levels or higher propensity to pay dividend, although there are some weak indications suggesting that companies having family investors as the two largest shareholders pay lower dividend levels. In summery, I find no significant evidence supporting the theory that large shareholders entrench minority shareholders by reducing dividends.