Ownership Structure's Effect on Dividend Payout Policy - A study on controlling shareholders' effect on dividend payout ratios of Swedish listed firms through a corporate governance perspective

Sammanfattning: Swedish firms' distinct ownership structures with high prevalence of controlling shareholders and separation of ownership and control via the use of dual class shares creates potential for large conflicts of interests between controlling shareholders and minority shareholders. Dividend payouts can act as a device for restricting these agency conflicts by disgorging cash to minority shareholders. This paper examines the relation between ownership structure and dividend payout ratio of listed firms in Sweden. We study 112 firms, listed at Nasdaq OMX Stockholm's Mid cap and Large cap, during the period 2010-2017. Our study concludes that the existence of a controlling shareholder is statistically significant associated with higher dividend payout ratio. We do not find any statistically significant effect of having another large shareholder besides the controlling owner, nor for separation of a controlling owners' voting and cash flow rights via dual class shares. The results suggest that controlling shareholders in Sweden do not expropriate minority owners by paying lower dividends.