Article

 

DIVIDEND PAYOUT AND CORPORATE GOVERNANCE ACROSS THE GREEK LISTED FIRMS (p.11-18)

by

Iraklis Apergis, ATHENS SCHOOL OF ECONOMICS AND BUSINESS

Sofia Eleftheriou, UNIVERSITY OF PIRAEUS

Keywords : Dividend payout, Corporate governance, Greek listed firms

JEL classification : G30, G34

Abstract

This paper seeks to test the outcome and substitution agency models of dividends at different stages of the corporate life-cycle. In a sample of Greek listed firms, the empirical analysis shows that the outcome model of dividends, which predicts that dividend payout increases in the strength of shareholder rights, prevails along the corporate life-cycle, but only where creditor rights are strong. Therefore, the agency cost of equity and debt versions of the outcome model of dividends holds. The findings document no evidence in support of the substitution model of dividends. Moreover, the results serve to highlight the profound influence that creditors exert on corporate payout policies. When shareholders enjoy considerable legal rights, but not so creditors, creditors demand, and firms consent to lower dividends.