Title: Impact of ownership structure on dividend smoothing: a comparison of family and non-family firms in Pakistan

Authors: Ejaz Hussain; Attaullah Shah

Addresses: UNDP Sub Office Peshawar, 08-C, Railway Road, University Town, Peshawar, Pakistan ' Institute of Management Sciences, Peshawar, Pakistan

Abstract: In this paper, we use unique features of Pakistan's corporate environment to test information asymmetry and agency theories in explaining dividend smoothing behaviour of firms. Based on a sample of 150 non-financial firms listed at the Karachi Stock Exchange over the period of 1999 to 2012, we find evidence that the degree of dividend smoothing in family firms is lower than the degree of dividend smoothing in non-family firms. Our findings are more in line with the implications of information asymmetry theory. Moreover, our findings suggest that firms in Pakistan follow more flexible dividend policies as compared to developed markets, despite the fact that Pakistan is in classical tax system.

Keywords: dividend smoothing; ownership structure; family firms; KSE; Karachi Stock Exchange; Pakistan; signalling theory; agency theory; family businesses; non-family firms; information asymmetry.

DOI: 10.1504/AAJFA.2015.073489

Afro-Asian Journal of Finance and Accounting, 2015 Vol.5 No.4, pp.356 - 377

Received: 16 May 2015
Accepted: 05 Oct 2015
Published online: 09 Dec 2015 *

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