Title: Is payout policy part of the corporate governance system? The case of France

Authors: Celine du Boys

Addresses: CERGAM, Aix Marseille University, IAE Aix en Provence, Clos Guiot Puyricard, CS 30063, 13089 Aix en Provence cedex 2, France

Abstract: This paper examines the place of payout policies in governance systems. It analyses the conditions in which payout is used to regulate agency conflicts and studies the relations between dividend or share repurchase and the other governance mechanisms. Through the study of 167 French firms from 2000 to 2005, the author shows that in France payout is not used to regulate conflicts between majority and minority shareholders, but rather to limit free cash flow risk or conflict between managers and shareholders. In presence of a majority shareholder, the governance systems do not achieve in forcing insiders to disgorge cash. The study confirms the substitutability between debt and payout and shows that blockholders have an effect on payout. On the contrary, the board|s characteristics, except the directors| independence, do not influence payout.

Keywords: France; payout policies; corporate governance; governance mechanisms; dividends; share repurchases; agency relationships; majority shareholders; minority shareholders; boards of directors; ownership structures; panel data analysis.

DOI: 10.1504/EJIM.2009.022633

European Journal of International Management, 2009 Vol.3 No.1, pp.42 - 59

Published online: 19 Jan 2009 *

Full-text access for editors Access for subscribers Purchase this article Comment on this article