原文：
Ownership concentration, agency conflicts, and dividend policy in
Japan
1. Introduction
Agency conflicts play an important role in corporate decisions. In their seminal paper, Jensen and Meckling (1976) show that decision makers may select value-decreasing outcomes that are justified only because of the wealth transfer from other stakeholders. To give a well-known example, managers may invest in unprofitable projects whose costs are borne by shareholders if doing so enhances their own status and bring them private benefits. Likewise, shareholders may take excessive risk knowing that the downside is assumed by debt holders, while they benefit from the upside.
Agency conflicts can take many other forms. Myers and Majluf (1984) argue that firms acting in the interest of current shareholders should rationally pass up profitable investment projects if the benefits are captured by outside investors. Shleifer and Vishny(1997) emphasize the agency conflicts between majority and minority shareholders, prompted by recent evidence that dominant shareholders extract rents at the expense of small shareholders through the tunneling of assets and profits, such as the use of unfair transfer pricing between controlled entities. Johnson et al. (2000) provide a few examples of expropriation taking place in developed countries.
Payout policy is one area of corporate decisions that cannot escape the influence of agency conflicts. In fact, Easterbrook (1984) argues that dividends can be either the result or the solution to agency conflicts. Because managers prefer to retain earnings to increase private consumption or reduce the risk on their human capital, low governance standards and poor shareholder protection are likely to result in lower payout. This view is clearly established in the cross-country analysis of La Porta et al. (2000). Conversely, dividend payout can contribute to mitigate agency conflicts. Jensen (1986) advocates to lower the free cash flows available to managers in order to increase financial discipline. Paying high dividends precisely achieves this purpose,
thus providing a cost effective substitute to shareholder monitoring.
More recently, Gugler and Yurtoglu (2003) highlight the importance of agency conflicts between shareholders by looking at the dividend policy of German firms. Since dominant shareholders can extract private benefits from the cash flows under their control, their preference translates into lower dividends. However, the presence of another large shareholder can restrain the rent extraction, leading eventually to a higher payout.
The purpose of this paper is to examine the dividend policy of Japanese firms from an agency perspective. If ownership concentration is consistent with the alignment of interest between management and shareholder, as studies of corporate performance have suggested, there should be a higher dividend payout. However, ownership concentration can also facilitate rent extraction by dominant shareholders, resulting in lower payout.
Our results support the second hypothesis. Ownership concentration is associated with significantly lower dividend payments in proportion of operating earnings as in proportion of book equity. In effect, the difference between the high concentration and low concentration groups is found to be in the order of 10%.
We investigate the reasons for this difference, focusing on the role of profitability, growth opportunities and changes in leverage in explaining the decision to change dividends. Our analysis uncovers a number of agency conflicts. First, tightly controlled firms (i.e., firms with concentrated ownership) are less likely to increase dividends when profitability increases and when operating profits are negative. This pattern is consistent with their lower payout and the assumption that dominant shareholder extract private benefits from resources under their control.
We also find that tightly controlled firms are more likely to omit dividends when investment opportunities improve, which protects the interest of current shareholders. Clearly, this decision reduces the likelihood of requiring further funding that would benefit outside investors, hence preventing the under-investment problem present in more likely to increase dividends when debt levels are high and less likely to omit dividends when debt increases, which is equivalent to a wealth transfer from debt
holders to shareholders since it decreases the amount of collateral backing the firm’s debt.
Overall, the analysis of the dividend adjustment decision provides some reasons for the lower payout associated with ownership concentration. More importantly, perhaps, the results suggest that as in the case of many corporate decisions, dividend policy is heavily determined by agency conflicts between majority shareholders and other stakeholders. In particular, the emblematic debt holder-shareholder conflict appears to be exacerbated by the presence of dominant players able to coordinate the actions of shareholders.
The rest of the article is structured as follows. Section 2 articulates the hypotheses regarding the relationship between ownership structure and dividend policy. Section 3
Describes the sample and date sources. The empirical results are presented in Section 4.Section 5 concludes.
Relationship between ownership and dividends 2.1 Positive relationship
According to Shleifer and Vishny (1986), ownership concentration creates the incentives for large shareholders to monitor the firm’s management, which overcomes the free-rider problem associated with dispersed ownership whereby small shareholders have no incentives to incur monitoring expenses for the benefit of other shareholders. Because of strict financial discipline, firms improve their capital allocation, reduce unprofitable investments and ultimately exhibit higher performance. Indeed, several studies (e.g., Claessens and Djankov, 1999) show that concentrated ownership contributes to higher profitability and market valuation.
The relevant consequence of financial discipline is that fewer resources are consumed in low return projects and more cash flows can thus be distributed as dividends. In support of this interpretation, Mitton (2005) show that firms with better corporate governance pay higher dividends in emerging markets. Likewise, La Porta et al. (2000) show that in countries with better shareholder protection, like the US, firms pay more dividends. Easterbrook (1984) suggests that dividend payments can be a substitute for monitoring.
Large shareholders have the power to constrain firms to disgorge excess cash flows in order to reduce monitoring expenses, resulting in the same positive relationship, but with reverse direction of causality. This interpretation is supported by the lower cash holdings of better-governed firms and firms with concentrated ownership (Dittmar et al., 2003).
Following these arguments, it is possible to formulate the hypothesis that ownership concentration is associated with higher dividend payments.
2.1 Negative relationship
The opposite view is that well governed firms do not need to pay higher dividends to increase financial discipline or enhance the alignment of interest between managers and shareholders. In the absence of agency conflicts, shareholders can be confident enough that the firm’s cash flows are properly used. Hence, the higher dividend payout advocated by Easterbrook (1984) does not appear to be essential to disciplining management.
Consistent with this view, Jensen et al. (1992) show that insider ownership is associated with significantly lower dividend payout among US firms. Farinha (2003) documents a similar negative relationship in the UK. Chen et al. (2005) provide evidence that some indicators of governance quality (existence of audit committee and percentage of independent directors) negatively affect dividend payouts in Hong Kong. These studies strongly suggest that the higher alignment of interest between managers as agents and shareholders as principals should actually result in lower dividend payments.
What's more, agency theory has recently highlighted possible conflicts between large and small shareholders. Shleifer and Vishny (1997) emphasize that large shareholders prefer to generate private benefits of control that are not shared by minority shareholders. Johnson et al. (2000) give several examples of controlling shareholders expropriating minority shareholders of profitable business opportunities. Claessens and Djankov (1999) explain downward-sloping firm value at high levels of ownership concentration by the potential risk of expropriation by controlling shareholders.
Gugler and Yurtoglu (2003) show that the lower dividend payout of majority-controlled firms in Germany is related to the probability that controlling shareholders extract private benefits at the expense of minority shareholders. Indeed, they find that increases in dividend payments are associated with significantly positive abnormal returns among firms where rent extraction is most likely given the discrepancy between cash flow rights and control rights. Furthermore, the presence of a second large shareholder contributes to increase the distribution of profits, as it decreases the scope of expropriation.
Maury and Pajuste (2002) document a similar negative association between ownership concentration and dividend payments in Finland, as well as evidence of the mitigating role of another large shareholder.
In a similar way, we can hypothesize that firms with concentrated ownership are associated with lower dividend payments.
Ownership concentration and dividend payout
In this section, we examine the effect of ownership concentration on dividend payout controlling for other firm characteristics that could influence payout policy.
Table 3 show that the coefficients on the Herfindhal index (LHH) and its associated dummy (Q2H) are both significantly negative. The coefficient on Q2H for the dividend payout ratio is less negative than the 2.5% in university analysis; but the coefficient for dividend yield is more negative. The difference in dividend payment as proportion of equity is seen to be about 10% across the two groups.
These results do not support the role of dividends as substitute for shareholder monitoring suggested by Easterbrook (1984). In fact, firms with concentrated ownership, which are more likely to be closely monitored, actually distribute lower dividends. This pattern is more consistent with the claim by Shleifer and Vishny (1997) that dominant shareholders prefer to extract private benefits, such as synergies with other controlled entities, rather than receive dividends that equally benefit minority shareholders.
The results are consistent with Gugler and Yurtoglu (2003) who report that majority controlled in Germany have lower payouts. Maury and Pajuste (2002) also
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