The purpose of this paper is to investigate the relationship between dividends and family involvement as well as corporate governance characteristics among Turkish public firms.
Using panel data on Turkish firms listed on the Borsa Istanbul 100 index for 2006–2014, three models are estimated. For the first two models, where the dependent variables are the dividend payout ratio and dividend yield, respectively, tobit regressions are run. The last model, which employs a dividend dummy as the dependent variable, is estimated with logistic regression.
There is a positive and concave relationship between family ownership and dividends. The existence of a family chairman reduces dividends. There is a positive association between board size and dividends and this relationship is weaker for firms with higher levels of family ownership. Finally, the ratio of independent directors on the board is negatively associated with dividends.
The findings imply that firms with substantial family ownership and active family participation in management are more likely to send a negative signal to minority shareholders by paying lower dividends. In addition, minority shareholders should pay attention to the board structure of firms in which they invest.
This study is one of the few to analyze the nonlinear relationship between family ownership and dividend payments as well as the role of family management in a developing country. Second, it investigates the role of board characteristics in explaining dividend payment decisions.
