Is payout policy part of the corporate governance system? The case of France


  • Du Boys Céline


  • Agency relationships
  • Dividends
  • Share repurchases
  • France
  • Payout policies
  • Governance mechanisms
  • Majority and minority shareholders
  • Boards of directors
  • Ownership structures
  • Panel data analysis

document type



This paper examines the place of payout policies in governance systems. It analyses the conditions in which payout is used to regulate agency conflicts and studies the relations between dividend or share repurchase and the other governance mechanisms. Through the study of 167 French firms from 2000 to 2005, the author shows that in France payout is not used to regulate conflicts between majority and minority shareholders, but rather to limit free cash flow risk or conflict between managers and shareholders. In presence of a majority shareholder, the governance systems do not achieve in forcing insiders to disgorge cash. The study confirms the substitutability between debt and payout and shows that blockholders have an effect on payout. On the contrary, the board's characteristics, except the directors' independence, do not influence payout. Biographical notes: Céline du Boys is a researcher in management and finance at Aix Marseille University (CERGAM), France. She received her PhD in 2007 in finance. Her research interests include corporate finance, payout policies, corporate governance and stakeholder theory. 1 Payout and governance: a theoretical study This paper aims at analysing the corporate governance role of payout policy and understanding its place in the governance system. In theory, dividend and share repurchase can reduce agency conflicts, but are they really used as governance mechanisms? Moreover, their place in the governance systems has not been really analysed yet. This paper seeks to make up for this gap. First, it studies the governance role of payout and analyses the conflicts it can regulate: conflicts between managers and shareholders and between majority and minority shareholders.

more information