Payout policy in family firms : A study on payout levels and dividend smoothing in Sweden
Abstract: This study investigates payouts in Swedish family firms by focusing on both the level and speed of adjustment of dividends. In addition, the use of dual-class shares in family firms is examined to further identify potential drivers of payout differences between family-controlled companies and non-family firms. Agency theory and previous studies suggest that high and stable payouts are used by controlling families to mitigate minority shareholders’ concerns of being expropriated. We find that family firms in Sweden do not differ from non-family firms in their payouts. The results could be seen as an indication of expropriation if minority shareholders should be compensated for higher agency costs, but it could also be that family control does not worsen agency conflicts between majority and minority shareholders. Rather, other ownership structures such as the use of dual-class shares to gain control in excess of ownership seem to be associated with higher levels of payouts. Neither do family firms smooth their dividends more than non-family firms. Instead, they adapt towards their target dividend at a higher pace.
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