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The role of dividends, debt and board structure in the governance of family controlled firms
journal contribution
posted on 2009-09-01, 00:00 authored by L Setia-Atmaja, George TanewskiGeorge Tanewski, M SkullyWe investigate whether family controlled firms use dividends, debt and board structure to exacerbate or mitigate agency problems between controlling and minority shareholders in a capital market environment with high investor protection and private benefits of control. Results indicate family controlled firms employ higher dividend payout ratios, higher debt levels and lower levels of board independence compared to non-family firms. This suggests family controlled firms use either dividends or debt as a substitute for independent directors. We also find that dividends and debt are more effective governance mechanisms in mitigating the families’ expropriation of minority shareholders’ wealth. Independent directors are, in contrast, more effective in controlling owner-manager conflict in non-family firms.
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Journal
Journal of business finance and accountingVolume
36Issue
7-8Pagination
863 - 898Publisher
WileyLocation
Chichester, Eng.Publisher DOI
ISSN
0306-686XeISSN
1468-5957Language
engPublication classification
C1.1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2009, The AuthorsUsage metrics
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