Abstract
Agency based studies provide conflicting predictions about the relation between CEO inside debt and corporate payout policy. This study argues that market structure provides an empirical setting to test when and how inside debt influences corporate payout policy. Using a large sample of US corporations for the period 2006–2016, it finds that CEO inside debt is positively related to the propensity and level of dividends and total payouts (dividends plus repurchases). The positive association between inside debt and payout variables is however significantly influenced by competition in product markets. Specifically, results indicate that inside debt exerts a positive impact on payout policy only in low competition markets and does not seem to have any significant effect on payout policy in high competition markets.
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