Advanced Corporate Finance PPT about the Agency problems and Dividends policy around the world. By Waqas Hmaidi

8/16/2019 Advanced Corporate Finance PPT about the Agency problems and Dividends policy around the world. By Waqas Hmaidi

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Agency Problems & Dividends Policies Aro

the World


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Hello!Waqas


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Rafael La Porta

• PhD & MA from ar!ard in economics"

• Researchin# foc$ses on the corporate

#o!ernance aro$nd the %orld"

Professor" Finance '$c(

school of b$siness at Dartmo$th

)olle#e"


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FLR"#$ LP%D'$LA"'Director of corporate #o!ernance &

family b$siness"Professor" La% & finance *D*)"

Taught @ Harvard, Yale university,

and university of Amsterdam.


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“▪ A young business leaders & one

of the most cited person ineconomic & business topics.

▪ Accused of nancial misbehavioamount of $150000, when wasthe director of chool of!anagement at "ale in #005.

FLORE!"O LO#E$%&E%'"LAE'


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Robert Ward(ishnyProfessor of Finance ) theuniversity of #hicago booth

school of business

#H& in E(onomi(s from )assa(husetts institute of Te(hnology.

Re(eived his *.A. e(onomi(s, from the university of )i(higan.

Taught Finan(ial )anagement + !ororation Finan(e over -years


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Andrei 'hleiferProfessor at Harvard universityand Russian American

economist.

Ph.D. from MIT & BA from Harvard

university.


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Will *e #overed

▪ Theoretical Issues

▪Data summary

▪Empirical Results

▪Conclusion


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Agency +roblems and dividend+olicies around the ,orld

First- lets com+are the t,o ty+es of Agenc.odels

/0 utcome .odel of Dividends1 Pay dividendas the minority shareholders force insiders of

the corporate for cash disgorge.

20 'ubstitute .odel of Dividends1 Paydividends for the estalishment of reputation !so can raise e"uity #nance later on in thefuture.


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D$($D"D

P3%%L*ased on the .. 4.odigliani & .ill6heory- ,e can say that the divide+olicy has no relationshi+ to the 7value0 'o- there is no dividend +u8

a +erfect ,orld0


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▪ +redict 7rm:sgro,th1

$y paying dividends #rmscan signal their future

pro#taility and success.%hen the dividend &rises'(decreases( the share price)ill go &up' (do)n(. $utrecently the result are moremi*ed+ and the dividend

can not help to predict'

D$($D"D' P3%%L

▪ Agency +roble

Dividend policy addreagency prolems aminsiders and outsider

insiders may avert thto damage outsiders.that's the reason outsprefer dividends.


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Agency A++roach toDividends

AgencyProlems !Dividends

Policy under theCommon -a)and Civil -a)

/0 #ommon la,#ountries have etterprotection for investorsand the outsiders canmae higher dividends.

20 #ivil la,#ountries )hich)eaer protectio

the outsiders cansmaller dividendscommon la)countries.


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6heoretical$ssue

4*erle and .eans4/;ling 4/;?@51 #onicts of interestbet,een cor+orate insiders li>e

controlling shareholders- managersand outside investors li>e theminority shareholders0

". Agen(y ro/lems andLegal Regime

&etriment

•Divert Corporate A

• Dilution of Outside

• Transfer Priin! "i

entities they ontro


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La,ProtectionVotin# ri#ht on some important corporate matter a) For the Election of Director.

b) The right to sue the company for damages.

LLSV+,./0 Legal protection of outside investors differs

enormously across the countries.

a/ )ommon La%0 Better legal protection of minority.

b/ )i!il La%0 Inferior legal protection of minority shareholde


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Agen(y and &ividends

#ay dividend0 orporate return earnin! to investor and are no lon!er ausin! these earnin! to #enefit themselves. Dividends $a #ird in the h

#etter than retained earnin!s $a #ird in the #ush%.

The role of Dividends in an A!eny Contet


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Dividends as an outome of 'e!al Protetion

)inority shareholders use their legal o1er to for(e (omanies to disgorge (ash.

$(% )otin! for diretors "ho offer #etter dividend.

$*% +ellin! share to potential hostile raiders.

$,% +uin! ompany that #enefit insider.

#etter protetion- hi!her dividend payout

under !ood protetion- -$(/D%01O2


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&ividends as a su/stitute for Legal #rote(tion of

'hareholders 2'u/stitution )odel3

4. E5ternal finan(ing6 #ay dividend

7ea8 legal rote(tion6 High dividend ayout

-. High gro1th rose(ts6 High dividend ayout293

Reason0

high gro1th rose(ts (omany 1ill have a /etter

(urrent use of fund.


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4. :ood rote(tion 6 High ayout ratio

-. *ad rote(tion 6 Lo1 ayout ratio

;.


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%antig

impact/

3sebigimage0


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3se charts toeB+lain your

ideas

CrayWhite *lac>


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r usediagrams to

eB+lain com+leBideas

*usiness

Finance

Leader

R

P

Rise

Idea

E*ample

te*t.

E*ample

te*t.

E*ample

te*t.

E*ample te*t.

E*ample te*t.

E*ample te*t.

Diagram featured ypo)eredtemplate.com

http://www.poweredtemplate.com/#check-fidelehttp://www.poweredtemplate.com/#check-fidele


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And tables tocom+are data

A $ C

0ello) / 2 ?

$lue


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.a+s

ouro2ce


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G;-E2@-/2

Whoa! 6hat:s a big number- aren:t

+roud9


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G;-E2@-/26hat:s a lot of money

/I6otal success!

/E-2 usersAnd a lot of users


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ur +rocessis easy

7rst second last


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Let:s revie,some conce+ts

Jello,Is the color of gold+utter and ripe lemons.In the spectrum ofvisile light+ yello) isfound et)een greenand orange.

*lueIs the colour of theclear sy and the deepsea. It is locatedet)een violet andgreen on the opticalspectrum.

RedIs the color of lood+and ecause of this ithas historically eenassociated )ithsacri#ce+ danger andcourage.

Jello,Is the color of gold+utter and ripe lemons.In the spectrum ofvisile light+ yello) isfound et)een greenand orange.

*lueIs the colour of theclear sy and the deepsea. It is locatedet)een violet andgreen on the opticalspectrum.

RedIs the color of lood+and ecause of this ithas historically eenassociated )ithsacri#ce+ danger andcourage.


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0ou can copy!pastegraphs from

3oogle ,heets

http://www.google.com/sheets/about/http://www.google.com/sheets/about/


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here

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#onclusion

The result of this artile is support the outome a!eny model of

Poorly proteted shareholders seem to ta3e "hatever dividends t

The result of this artile doesn4t find the effet of taes on dividen


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#redits

,pecial thans to all the people )ho made andreleased these a)esome resources for free5

▪ Presentation template y ,lidesCarnival

▪ Photographs y 6nsplash

http://www.slidescarnival.com/http://unsplash.com/http://unsplash.com/http://www.slidescarnival.com/


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6han>

s!!Any questions9 Jou can 7nd me at)username &user)mail0me

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Advanced Corporate Finance PPT about the Agency problems and Dividends policy around the world. By Waqas Hmaidi