Dividend policies of privately held firms
Abstract
Dividend policy is one of the most important firm decisions that to a high degree interacts with other financing decisions, making it crucial in the overall decision process within a firm. The amount firms distribute to their shareholders and the method they choose for cash distribution can influence their valuation, impact investment choices, affect the tax obligations of investors, and convey information to the market regarding the firm's relative performance compared to its peers. Firms revaluate their capital structure, financing options, and investment decisions before they would change their dividend policy. For example, they would sometimes forgo profitable investment opportunities before cutting dividends. Hence, their importance lies in the fact that once dividend decision is made they tend to be sticky, tied to long-term sustainable earnings, and smoothed from year to year. In privately held firms dividends play a crucial role in attracting more investors, and as a conflict reducing tool between different shareholders. Firms appear to establish trust successfully, with minority shareholders showing a greater inclination to invest more in the same firm at a later stage. Moreover, privately held firms that pay dividends regularly cultivate a reputation for fair treatment of external shareholders . A thorough examination of the important corporate finance phenomenon of dividend policy requires a comprehensive assessment of both the interests and requirements of investors, as well as the firm's ability to maintain a steady flow of dividends.
This PhD dissertation fills the gap in the understanding of privately held firm dividend policy. Firstly, I provide an evidence that dividend policy of privately held firms follows a predictable pattern of the life cycle. Next, I shed more light on the most important drivers of dividend policy of SMEs. Finally, I identify and investigate the link between slack resources and dividend policy of privately held firms.
- Supervisors Prof. Dr. Ine Paeleman
- Date Friday 20 October 2023 at 5 p.m.
- Location Promotion Room, Grauwzusters Cloister,University of Antwerp, City Campus,Lange Sint-Annastraat 7, 2000 Antwerp
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Public PhD defence Jovana Cadenovic
