Does Family ownership matter in dividend payout decision? Evidence from a family-firm dominated country

We examine the association between ownership structure and dividend payout policy in a family firms dominated economy. More specifically, we test whether family firms pay higher dividend compared to counter non-family firms in Bangladesh. We argue that family firms are more likely to pay higher dividend to display lower agency problems between controlling family and minority shareholders. Using 993 firm-year observations from 2011-2019, we find that, consistent with our arguments, family firms distribute higher dividend compared to non-family firms to mitigate expropriation concern of non-controlling shareholders. This study contributes to family business literature and provides policy implications in the sense that regulators understand the importance of ownership structure and how it affects firms’ dividend payout policy that serves shareholders’ interests.