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TWO PROXIES FOR SHAREHOLDER INFLUENCE: A CASE OF PAYOUT POLICY

Xiaoying (Cindy) Chen, Amit Sinha, Xin Chen

DOI: 10.22495/cocv10i1c6art2

Abstract

This paper investigates the relative importance of two proxies for shareholder influence over the board: the size of equity ownership and Banzhaf index voting power. Our empirical findings indicate that consideration of voting power in models may result in conclusions different from those that consider the size of equity ownership, on payout policy if firms are either paying dividends or repurchasing shares, or both. Comparing to the size of equity ownership, empirical results by the proxy of voting power are more consistent with theoretical predictions.

Keywords: Shareholders, Payout Policy, Partial Adjustment Model

How to cite this paper: Chen, X., Sinha, A., & Chen, X. (2012). Two proxies for shareholder influence: A case of payout policy. Corporate Ownership & Control, 10(1-6), 573-585. http://doi.org/10.22495/cocv10i1c6art2

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