Publication: Staggered boards, managerial entrenchment, and dividend policy
Issued Date
2009-05-18
Resource Type
ISSN
09208550
Other identifier(s)
2-s2.0-65649111765
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Mahidol University
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SCOPUS
Bibliographic Citation
Journal of Financial Services Research. Vol.36, No.1 (2009), 1-19
Suggested Citation
Pornsit Jiraporn, Pandej Chintrakarn Staggered boards, managerial entrenchment, and dividend policy. Journal of Financial Services Research. Vol.36, No.1 (2009), 1-19. doi:10.1007/s10693-009-0059-6 Retrieved from: https://repository.li.mahidol.ac.th/handle/123456789/27360
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Title
Staggered boards, managerial entrenchment, and dividend policy
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Abstract
Motivated by agency theory, we explore the potential impact of managerial entrenchment through staggered boards on dividend policy. The evidence suggests that firms with staggered boards are more likely to pay dividends. Among firms that pay dividends, those with staggered boards pay larger dividends. We also show that the impact of staggered boards on dividend payouts is substantially stronger (as much as two to three times larger) than the effect of all other corporate governance provisions combined. Overall, the evidence is consistent with the notion that dividends help alleviate agency conflicts. Thus, firms more vulnerable to managerial entrenchment, i.e., firms with staggered boards, rely more on dividends to mitigate agency costs. Aware of potential endogeneity, we demonstrate that staggered boards likely bring about, and are not merely associated with, larger dividend payouts. Our results are important, as they show that certain governance provisions have considerably more influence than others on critical corporate activities such as dividend payout decisions. © Springer Science+Business Media, LLC 2009.