Do shareholder coalitions modify dominant owner�s control? The impact on dividend policythe impact on dividend policy

Resumen

This research examines the impact of shareholders� coalitions on firms� dividend policy. We focus on the Continental Europe context, where firms are commonly characterized by the presence of dominant shareholders, a type of ownership that is difficult to analyze in an Anglo-Saxon environment. The results show that shareholders� agreements reduce the payment of dividends. Specifically, when the voting rights held by the coalition increase in relation to the voting rights held by the dominant owner, dividend payments decline. The results show that coalitions serve as an entrenchment mechanism that allows the dominant owner to escape the prorata consequences of his or her decisions. As a result, the incentive to reduce dividend payment to gain more control of the funds generated by the company increases.