TY - JOUR
T1 - How do powerful CEOs view dividends and stock repurchases? Evidence from the CEO pay slice (CPS)
AU - Chintrakarn, Pandej
AU - Chatjuthamard, Pattanaporn
AU - Tong, Shenghui
AU - Jiraporn, Pornsit
N1 - Publisher Copyright:
© 2018 Elsevier Inc.
PY - 2018/11
Y1 - 2018/11
N2 - Agency theory suggests that CEOs view dividends unfavorably because dividend payouts deprive them of the free cash flow they could otherwise exploit. Using Bebchuk, Cremers, and Peyer's (2011) CEO pay slice (CPS) to measure CEO power, we find that an increase in CEO power by one standard deviation decreases the probability of paying dividends by 17.48%. For dividend-paying firms, a rise in CEO power by one standard deviation reduces the size of dividend payouts by 5.91%. Share repurchases, however, are not influenced by CEO power, although they too take away the free cash flow from the CEO.
AB - Agency theory suggests that CEOs view dividends unfavorably because dividend payouts deprive them of the free cash flow they could otherwise exploit. Using Bebchuk, Cremers, and Peyer's (2011) CEO pay slice (CPS) to measure CEO power, we find that an increase in CEO power by one standard deviation decreases the probability of paying dividends by 17.48%. For dividend-paying firms, a rise in CEO power by one standard deviation reduces the size of dividend payouts by 5.91%. Share repurchases, however, are not influenced by CEO power, although they too take away the free cash flow from the CEO.
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U2 - 10.1016/j.iref.2018.02.023
DO - 10.1016/j.iref.2018.02.023
M3 - Article
AN - SCOPUS:85043240477
SN - 1059-0560
VL - 58
SP - 49
EP - 64
JO - International Review of Economics and Finance
JF - International Review of Economics and Finance
ER -