The Managerial Ownership and Dividend Payout

Abstract

Drawing on the corporate governance and managerial entrenchment literature, this study aims to examine whether the managerial ownership level affects the dividend payout ratio.  Using data from Thai listed companies spanning from 2013 – 2017, a positive relationship is reported between managerial ownership and dividend payout (captured by dividend yield), supporting the managerial entrenchment effect assumption. Findings suggest that managerial ownership may be considered as an internal governance mechanism, yet high dividends may be paid to compensate for such stewardship force. This study enriches the literature related to managerial ownership and its effect. Further, the results of this study have an implication for regulators to consider whether a critical insider ownership level should be governed to protect the benefits of non-insider shareholders that is likely to be dispersed in the Thai stock market context.