Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:

 

Minority Shareholder Protection Can Impact Dividend Policy

16.05.2008
Seppo Kinkki will defend his doctoral dissertation ”Essays on Minority Protection and Dividend Policy” at the Helsinki School of Economics on Friday, April 4, 2008.

This dissertation covers the impact of minority protection on dividend policy. Majority shareholders as well as company management have the opportunity to take advantage of their position by influencing dividend distribution at the expense of minority shareholders. Legislation can be used to secure the position of minority shareholders. Scandals, such as that of Enron, have proven the necessity of this type of legislation.

In the United States, regulations such as Sarbanes Oxley (2002) seek to improve investor protection. Nonetheless, European Company Law (2001) does not include any common directives on minority protection. Therefore, minority protection has been left to the responsibility of individual countries, either through corporate governance regulations or regulations related to shareholder meetings. Usually in Europe the legislation of different countries grants investors indirect ways of influencing dividend distribution. Finnish Law grants direct influence to minorities. The law states that a preordained minority (1/10) has the right to demand at least half of the company’s profits to be shared, as long as the amount does not exceed 8 percent of their own capital.

The study examines how minority protection, such as the Finnish minority protection model, works in actuality or if the actions of the largest shareholders and company management can in fact paralyze the realization of shareholder protection.

The most central result of the study is that Finnish legislation provides minority shareholders better protection against management than majority shareholder influence. By combining characteristics of American legislation together with minority protection resembling the Finnish model, a legislation could be formed which would protect both the minority and the majority shareholders against company management in cases where management aims to limit dividend distribution.

In finance theory, dividends are believed to possess informational value for a company’s future earnings development. Another pivotal result of the study is that minority protection lessens the potential informational value of dividends. From a legislator’s perspective, minority protection should protect the minority shareholders’ right to decent dividends, but also safeguard the dividend’s informational value. When allocating capital, investors could then invest funds as productively as possible.

Leena Vuorenmaa | alfa
Further information:
http://hsepubl.lib.hse.fi/EN/diss/

More articles from Business and Finance:

nachricht How Strong Brands Translate into Money
15.11.2016 | Kühne Logistics University - Wissenschaftliche Hochschule für Logistik und Unternehmensführung

nachricht Demographic change depresses tax revenues
04.11.2016 | Fraunhofer-Institut für Angewandte Informationstechnik FIT

All articles from Business and Finance >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: Electron highway inside crystal

Physicists of the University of Würzburg have made an astonishing discovery in a specific type of topological insulators. The effect is due to the structure of the materials used. The researchers have now published their work in the journal Science.

Topological insulators are currently the hot topic in physics according to the newspaper Neue Zürcher Zeitung. Only a few weeks ago, their importance was...

Im Focus: Significantly more productivity in USP lasers

In recent years, lasers with ultrashort pulses (USP) down to the femtosecond range have become established on an industrial scale. They could advance some applications with the much-lauded “cold ablation” – if that meant they would then achieve more throughput. A new generation of process engineering that will address this issue in particular will be discussed at the “4th UKP Workshop – Ultrafast Laser Technology” in April 2017.

Even back in the 1990s, scientists were comparing materials processing with nanosecond, picosecond and femtosesecond pulses. The result was surprising:...

Im Focus: Shape matters when light meets atom

Mapping the interaction of a single atom with a single photon may inform design of quantum devices

Have you ever wondered how you see the world? Vision is about photons of light, which are packets of energy, interacting with the atoms or molecules in what...

Im Focus: Novel silicon etching technique crafts 3-D gradient refractive index micro-optics

A multi-institutional research collaboration has created a novel approach for fabricating three-dimensional micro-optics through the shape-defined formation of porous silicon (PSi), with broad impacts in integrated optoelectronics, imaging, and photovoltaics.

Working with colleagues at Stanford and The Dow Chemical Company, researchers at the University of Illinois at Urbana-Champaign fabricated 3-D birefringent...

Im Focus: Quantum Particles Form Droplets

In experiments with magnetic atoms conducted at extremely low temperatures, scientists have demonstrated a unique phase of matter: The atoms form a new type of quantum liquid or quantum droplet state. These so called quantum droplets may preserve their form in absence of external confinement because of quantum effects. The joint team of experimental physicists from Innsbruck and theoretical physicists from Hannover report on their findings in the journal Physical Review X.

“Our Quantum droplets are in the gas phase but they still drop like a rock,” explains experimental physicist Francesca Ferlaino when talking about the...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

Event News

ICTM Conference 2017: Production technology for turbomachine manufacturing of the future

16.11.2016 | Event News

Innovation Day Laser Technology – Laser Additive Manufacturing

01.11.2016 | Event News

#IC2S2: When Social Science meets Computer Science - GESIS will host the IC2S2 conference 2017

14.10.2016 | Event News

 
Latest News

Researchers identify potentially druggable mutant p53 proteins that promote cancer growth

09.12.2016 | Life Sciences

Scientists produce a new roadmap for guiding development & conservation in the Amazon

09.12.2016 | Ecology, The Environment and Conservation

Satellites, airport visibility readings shed light on troops' exposure to air pollution

09.12.2016 | Health and Medicine

VideoLinks
B2B-VideoLinks
More VideoLinks >>>