Family Involvement and Dividend Policy in Listed and Non-Listed Firms

Abstract

We evaluate the relationship between family involvement, the likelihood of dividend payment, and the amounts of the dividends paid. Using a detailed data-base of 523 mostly non-listed Colombian companies (1996 to 2006), we found that majority family owner-ship has significant negative effects on the likelihood of dividend payment. Furthermore, family control through pyramidal structures significantly reduces the level of payouts. In addition, family involvement on the board positively and significantly increases the likelihood of dividend payment, even when the CEO is a member of the founding family. The presence of the founder has a negative, though weakly significant impact on the dividend payments made by firms.

Nosotros evaluamos la relación entre el involucramiento familiar y la probabilidad de pago de dividendo, así como el monto del dividendo pagado. Usamos una base detallada de 523 de empresas colombianas principalmente no listadas (1996-2006). Encontramos que la propiedad familiar tiene un efecto negativo y significativo en la probabilidad de pago de dividendos. Más aún, el control familiar a través de estructuras piramidales significativamente reduce el nivel de pagos. Adicionalmente, el involucramiento familiar en la junta incrementa significativamente la probabilidad de pago de dividendos, inclusive cuando el CEO es miembro de la familia fundadora. La presencia del fundador tiene un efecto negativo, aunque sólo débilmente significativo, en el pago de dividendos de las empresas.