TY - JOUR
T1 - Dividend policy and the takeover market
T2 - Half a century of evidence
AU - Chintrakarn, Pandej
AU - Chatjuthamard, Pattanaporn
AU - Jiraporn, Pornsit
AU - Kyaw, Khine
N1 - Publisher Copyright:
© 2025 The Authors
PY - 2025/3
Y1 - 2025/3
N2 - We study the effect of a key external governance mechanism – the takeover market – on dividend policy. We employ a unique measure to assess vulnerability to corporate takeovers derived from the varied enactment of legislation across different states. Using an extensive dataset spanning half a century and all state regulations, we demonstrate that firms more susceptible to takeover threats pay significantly higher dividends. Our results support agency theory, which postulates that the takeover market compels self-serving managers to return more cash to shareholders through higher dividends.
AB - We study the effect of a key external governance mechanism – the takeover market – on dividend policy. We employ a unique measure to assess vulnerability to corporate takeovers derived from the varied enactment of legislation across different states. Using an extensive dataset spanning half a century and all state regulations, we demonstrate that firms more susceptible to takeover threats pay significantly higher dividends. Our results support agency theory, which postulates that the takeover market compels self-serving managers to return more cash to shareholders through higher dividends.
UR - http://www.scopus.com/inward/record.url?scp=85216626206&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85216626206&partnerID=8YFLogxK
U2 - 10.1016/j.ribaf.2025.102774
DO - 10.1016/j.ribaf.2025.102774
M3 - Article
AN - SCOPUS:85216626206
SN - 0275-5319
VL - 75
JO - Research in International Business and Finance
JF - Research in International Business and Finance
M1 - 102774
ER -