PAYOUT POLICY, OWNERSHIP STRUCTURE, TAXATION, AND CORPORATE VALUE: EVIDENCE FROM BRAZIL

摘要

According to the Brazilian tax code, the nature of the shareholder leads to theincidence of different marginal tax rates on cash earnings payouts (dividends and Interest onEquity – IOE). This fact, combined with the pervasive ownership concentration characteristicof the Brazilian capital market, influences financial decision-making and gives rise topotential conflicts of interest between minority and majority shareholders. This paper usespanel data Probit and Tobit estimations to investigate the relationship between the ownershipstructure and cash earnings payouts of a sample of 404 Brazilian listed firms in the period1997-2008. One major contribution of this study is the analysis of the payout of IOE from thestandpoint of the shareholders instead of the usual firm-based perspective. Empirical resultssuggest that (a) the ownership structure influences both the propensity and the amount paidout as IOE; (b) the presence of institutional investors significantly increases cash payouts inthe form of IOE vis-à-vis cash dividends; (c) deviations from the "one-share-one-vote rule"are positively related to IOE payouts; (d) larger, more profitable firms with better governancepractices and more growth opportunities tend to payout more cash in the form of IOE, apractice that increases the wealth of the shareholders.