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Why do family firms pay cash dividends in emerging markets? Corporate control and family succession in Korea

Following the economic crisis in 1997, the Korean government introduced the enhanced corporate governance and reform policy, which drove family-controlled firms to search strategic reaction for control succession and wealth transfer. This paper explores alternative explanations for why Korean firms...

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Main Author: Ko, Young Kyung *
Format: Article
Published: LifeScience Global 2019
Subjects:
HF5601 Accounting
Online Access:http://eprints.sunway.edu.my/1090/
http://www.lifescienceglobal.com/pms/index.php/jrge/article/view/5820
http://www.lifescienceglobal.com/pms/index.php/jrge/index
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spelling my.sunway.eprints.10902019-08-16T09:34:42Z http://eprints.sunway.edu.my/1090/ Why do family firms pay cash dividends in emerging markets? Corporate control and family succession in Korea Ko, Young Kyung * HF5601 Accounting Following the economic crisis in 1997, the Korean government introduced the enhanced corporate governance and reform policy, which drove family-controlled firms to search strategic reaction for control succession and wealth transfer. This paper explores alternative explanations for why Korean firms choose to pay cash dividends around this corporate reform period. What lead firms to pay cash dividends remains largely unexplained by the reducing agency cost, signaling, or life-cycle theories. This study focuses on relations between the ownership structure and cash dividends payout, seeking effects deriving from (i) controlling shareholder (CS) and (ii) their family members. The logit analysis result shows that firms with large control rights, especially higher ownership of other family members of CS are more likely to pay cash dividends. After adjusting for the characteristics that affect the degree of cash dividends, ownership variables are positively related to payout ratios and dividend yields. CS family members’ ownership has a statistically stronger effect on payout ratios than CS’s. These results provide the evidence of incentive for corporate control succession within the family with least costs carried by the family members of controlling shareholders who positively influence payout decisions and dividend ratios. LifeScience Global 2019 Article PeerReviewed Ko, Young Kyung * (2019) Why do family firms pay cash dividends in emerging markets? Corporate control and family succession in Korea. Journal of Reviews on Global Economics, 8. pp. 275-290. ISSN 1929-7092 http://www.lifescienceglobal.com/pms/index.php/jrge/article/view/5820 http://www.lifescienceglobal.com/pms/index.php/jrge/index
institution Sunway University
building Sunway Campus Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Sunway University
content_source Sunway Institutional Repository
url_provider http://eprints.sunway.edu.my/
topic HF5601 Accounting
spellingShingle HF5601 Accounting
Ko, Young Kyung *
Why do family firms pay cash dividends in emerging markets? Corporate control and family succession in Korea
description Following the economic crisis in 1997, the Korean government introduced the enhanced corporate governance and reform policy, which drove family-controlled firms to search strategic reaction for control succession and wealth transfer. This paper explores alternative explanations for why Korean firms choose to pay cash dividends around this corporate reform period. What lead firms to pay cash dividends remains largely unexplained by the reducing agency cost, signaling, or life-cycle theories. This study focuses on relations between the ownership structure and cash dividends payout, seeking effects deriving from (i) controlling shareholder (CS) and (ii) their family members. The logit analysis result shows that firms with large control rights, especially higher ownership of other family members of CS are more likely to pay cash dividends. After adjusting for the characteristics that affect the degree of cash dividends, ownership variables are positively related to payout ratios and dividend yields. CS family members’ ownership has a statistically stronger effect on payout ratios than CS’s. These results provide the evidence of incentive for corporate control succession within the family with least costs carried by the family members of controlling shareholders who positively influence payout decisions and dividend ratios.
format Article
author Ko, Young Kyung *
author_facet Ko, Young Kyung *
author_sort Ko, Young Kyung *
title Why do family firms pay cash dividends in emerging markets? Corporate control and family succession in Korea
title_short Why do family firms pay cash dividends in emerging markets? Corporate control and family succession in Korea
title_full Why do family firms pay cash dividends in emerging markets? Corporate control and family succession in Korea
title_fullStr Why do family firms pay cash dividends in emerging markets? Corporate control and family succession in Korea
title_full_unstemmed Why do family firms pay cash dividends in emerging markets? Corporate control and family succession in Korea
title_sort why do family firms pay cash dividends in emerging markets? corporate control and family succession in korea
publisher LifeScience Global
publishDate 2019
url http://eprints.sunway.edu.my/1090/
http://www.lifescienceglobal.com/pms/index.php/jrge/article/view/5820
http://www.lifescienceglobal.com/pms/index.php/jrge/index
_version_ 1644324476509224960
score 13.211869

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