How does ownership structure affect the financing and dividend decisions of firm?

Tahar Tayachi, Ahmed Imran Hunjra, Kirsten Jones, Rashid Mehmood, Mamdouh Abdulaziz Saleh Al-Faryan

Research output: Contribution to journalArticlepeer-review


Purpose: Ownership structure deals with internal corporate governance mechanism, which plays important role in minimizing conflict of interests between shareholders and management Ownership structure is an important mechanism that influences the value of firm, financing and dividend decisions. This paper aims to examine the impact of the ownership structures, i.e. managerial ownership, institutional ownership on financing and dividend policy.

Design/methodology/approach: The authors use panel data of manufacturing firms from both developed and developing countries, and the generalized method of moments (GMM) is applied to analyze the results. The authors collect the data from DataStream for the period of 2010 to 2019.

Findings: The authors find that managerial ownership and ownership concentration have significant and positive effects on debt financing, but they have significant and negative effects on dividend policy. Institutional ownership shows a positive impact on financing decisions and dividend policy for sample firms.

Originality/value: This study fills the gap by proving the policy implications for both firms and investors, as managers prefer debt financing, but at the same time try to ignore dividend payment. Therefore, investors may not invest in firms with a higher proportion of managerial ownership and may choose to invest more in institutional ownership, which lowers the agency cost.
Original languageEnglish
Number of pages18
JournalJournal of Financial Reporting and Accounting
Early online date31 Dec 2021
Publication statusEarly online - 31 Dec 2021


  • ownership structure
  • dividend policy
  • capital structure
  • GMM approach


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