Summary of

Agency Problems and Divided Policies around the World

This paper practices a sample of firms from 33 countries around the world to lean-to bright on
divided policies of big corporations. We proceeds benefit of unlike legal protection of minority
shareholder crossways these countries to equate divided policies of companies whose minority
shareholder face different risk of expropriation of their wealth by corporate insider. We use this
cross-sectional variation to survey the agency approach to divided policy.
We differentiate two substitute agency model of dividends. In the first model divided are
outcome of operative legal protection shareholders, which aid minority shareholder on the way
to extract divided payment from corporate insiders. In the second divided are supernumerary
for operative legal protection, which remains enable for firms in unguarded legal environment
to found reputation for good treatment of investors through divided policies.
Our data propose that the agency approach is highly applicable to a considerate of corporate
divided policies around the world. More specifically we find unfailing upkeep for the outcome
agency model of divided. Firms functioning in the countries with improved protection of
minority shareholders pay higher divided. Furthermore in these counties fast growth firms pay
lower divided than slow growth firms stable with the idea that legally protected shareholder
are enthusiastic to wait for divided when investment opportunities are good. On the other
hand, poorly protected shareholders seem to take whatever divided they can get, regardless of
investment opportunity. This apparent misallocation of investment is presumably part of the
agency cost of poor legal protection.
In our examination, we discovery no decision evidence on the effect of taxes on divided
policies. Nor can we practice our data to consider the significance of divided signaling. In fact,
our results are contain with the idea that, on the margin, divided policies of firms may transport
information to some investors. Despite the conceivable relevance of alternative theories, firms
give the impression to pay out cash o investor because opportunities to good deal or disinvests
it are in part some degree of by law and because minority shareholder have an adequate
amount of power to quotation it. In this respect, the superiority of legal protection investors is
as essential for divided polices as it is for other fundamental corporate pronouncements.