Overlapping ownership in the Euronext 100

: how overlapping ownership and tunneling impact dividend policy

Abstract

The purpose of this dissertation is to assess the impacts of overlapping ownership and tunneling on dividend policy. The presence of overlapping shareholders leads managers to consider the profits of other firms when making strategic decisions. This results in a decline in competition causing less investment and higher frequency and size of dividend payments. However, when overlapping shareholders wish to “tunnel” resources out of firms, dividends may impair their ability to do so. To answer the question of how overlapping ownership and tunneling influence dividend policy, a logit regression model was estimated to explain dividend payments using measures of overlapping ownership, tunneling, profitability, investment opportunities, size, and compensation schemes. The estimation’s results suggest a link between overlapping ownership, tunneling and dividend payments. Specifically, overlapping ownership is shown to have a positive influence on dividend payments, while tunneling is shown to have a negative influence.

Date of Award	15 Jul 2021
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Ricardo Ribeiro (Supervisor)