Rent extraction by large shareholders: evidence using dividend policy in the Czech Republic

Abstract

Using cross-sectional analysis of corporate dividend policy we show that large shareholders extract rents from firms and expropriate minority shareholders in the weak corporate governance environment of an emerging economy. By comparing dividends paid across varying corporate ownership structures - concentration, type, and domicile of ownership - we quantify these effects and reveal that they are substantial.

Keywords

• rent extraction
• large shareholders
• dividend policy