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Operation of Internal Capital Market through Dividend Payout: Evidence from Iranian Business Groups

Mardan, Mostafa | 2022

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 55572 (44)
  4. University: Sharif University of Technology
  5. Department: Management and Economics
  6. Advisor(s): Ebrahimnejad, Ali; Heidari, Mahdi
  7. Abstract:
  8. Studies of the ownership structure of companies in different countries demonstrates that pyramidal ownership structures and business groups are present and even dominant in many countries. This type of structure allows the ultimate owners to leverage their capital and control more capital in the economy. Studies related to this type of ownership structure, scrutinize various motivations that have caused the formation of this type of ownership structure. Some studies emphasize the destructive role of business groups, such as tunneling and creating monopolies through common ownership in competing companies, and as a result, consumers and small shareholders are expropriated. Others, relying on theoretical models, try to explain the vertical or horizontal growth of the ownership structure of groups. The third group of studies, emphasize the inefficiency of institutions and markets in developing countries and the benefits of this type of ownership structure in internalizing these problems and overcoming the underdevelopment of external markets. The present study, by examining the business groups of Iran as a developing country with an inefficient capital market, intends to examine the internal capital market in business groups. Internal capital is from the dividend channel. Also, by using the shock imposed on the dividend tax in 2001 as a result of the amendment of the tax law, an attempt has been made to investigate the effect of the dividend tax on the effectiveness of dividend as a channel for the operation of the internal capital market.
  9. Keywords:
  10. Business Group ; Dividend ; Ownership Structure ; Dividend Payout Ratio ; Dividend Tax ; Pyramidal Ownership Structure ; Capital Market

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