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Title: The payout policy of politically connected firms: tunnelling or reputation?
Authors: López-Iturriaga, Félix J.
Santana Martín, Domingo Javier 
UNESCO Clasification: 5303 Contabilidad económica
Keywords: Board Of Directors
Dominant Owners
Political Connections
Contabilidad financiera, et al
Issue Date: 2019
Project: ECO2017-84864-P
El Papel de Los Medios de Comunicación en El Gobierno Corporativo y en la Calidad de la Información Financiera Divulgada 
Journal: North American Journal of Economics and Finance 
Abstract: Using company directors who have a background in politics as a measure of political connections, we analyze the relationship between political ties and dividend policy in a sample of listed Spanish firms. We find political connections to be positively related with cash dividends. This result is consistent with concern regarding the interests of minority shareholders in politically connected firms or with the lower number of financial constraints in these firms. We also find a positive relationship between political connections and share repurchases, a means of shareholder compensation that is gaining popularity, a result that might be related to the valuation of politically connected firms. Our results are robust to alternative empirical specifications such as the propensity score matching procedure, different metrics of payout policy, and different measures of political connections. Interestingly, the recent financial crisis has not changed connected firms’ preference for shareholder compensation with dividends and share repurchases.
ISSN: 1062-9408
DOI: 10.1016/j.najef.2019.101025
Source: North American Journal of Economics and Finance [ISSN 1062-9408], v. 50, 101025
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