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 Microtechnology industry is hiring – positive developments of past years continue
09.04.2018 | IVAM Fachverband für Mikrotechnik

nachricht RWI/ISL-Container Throughput Index with minor decline on a high overall level
20.03.2018 | RWI – Leibniz-Institut für Wirtschaftsforschung

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: Explanation for puzzling quantum oscillations has been found

So-called quantum many-body scars allow quantum systems to stay out of equilibrium much longer, explaining experiment | Study published in Nature Physics

Recently, researchers from Harvard and MIT succeeded in trapping a record 53 atoms and individually controlling their quantum state, realizing what is called a...

Im Focus: Dozens of binaries from Milky Way's globular clusters could be detectable by LISA

Next-generation gravitational wave detector in space will complement LIGO on Earth

The historic first detection of gravitational waves from colliding black holes far outside our galaxy opened a new window to understanding the universe. A...

Im Focus: Entangled atoms shine in unison

A team led by Austrian experimental physicist Rainer Blatt has succeeded in characterizing the quantum entanglement of two spatially separated atoms by observing their light emission. This fundamental demonstration could lead to the development of highly sensitive optical gradiometers for the precise measurement of the gravitational field or the earth's magnetic field.

The age of quantum technology has long been heralded. Decades of research into the quantum world have led to the development of methods that make it possible...

Im Focus: Computer-Designed Customized Regenerative Heart Valves

Cardiovascular tissue engineering aims to treat heart disease with prostheses that grow and regenerate. Now, researchers from the University of Zurich, the Technical University Eindhoven and the Charité Berlin have successfully implanted regenerative heart valves, designed with the aid of computer simulations, into sheep for the first time.

Producing living tissue or organs based on human cells is one of the main research fields in regenerative medicine. Tissue engineering, which involves growing...

Im Focus: Light-induced superconductivity under high pressure

A team of scientists of the Max Planck Institute for the Structure and Dynamics of Matter (MPSD) at the Center for Free-Electron Laser Science in Hamburg investigated optically-induced superconductivity in the alkali-doped fulleride K3C60under high external pressures. This study allowed, on one hand, to uniquely assess the nature of the transient state as a superconducting phase. In addition, it unveiled the possibility to induce superconductivity in K3C60 at temperatures far above the -170 degrees Celsius hypothesized previously, and rather all the way to room temperature. The paper by Cantaluppi et al has been published in Nature Physics.

Unlike ordinary metals, superconductors have the unique capability of transporting electrical currents without any loss. Nowadays, their technological...

All Focus news of the innovation-report >>>

Anzeige

Anzeige

VideoLinks
Industry & Economy
Event News

Save the date: Forum European Neuroscience – 07-11 July 2018 in Berlin, Germany

02.05.2018 | Event News

Invitation to the upcoming "Current Topics in Bioinformatics: Big Data in Genomics and Medicine"

13.04.2018 | Event News

Unique scope of UV LED technologies and applications presented in Berlin: ICULTA-2018

12.04.2018 | Event News

 
Latest News

Supersonic waves may help electronics beat the heat

18.05.2018 | Power and Electrical Engineering

Keeping a Close Eye on Ice Loss

18.05.2018 | Information Technology

CrowdWater: An App for Flood Research

18.05.2018 | Information Technology

VideoLinks
Science & Research
Overview of more VideoLinks >>>