Dividend Policy of Large Publicly Held Family Firms: Socioemotional Wealth (SEW) Perspective

Abstract

Despite the prevalence of family firm studies based on socioemotional wealth (SEW) perspective, we lack our understanding in what determines the degree to which owner family’s SEW encompasses from owner family members to external stakeholders. This paper suggests that, in large publicly held family firms, owner family’s discretion level and their interplay with different shareholders affect the degree to which owner family’s SEW encompasses its minority shareholders. Assuming that dividend payout indicates firm’s level of minority shareholder protection, this study investigates heterogeneity in dividend policy across publicly held family firms in Korea. The results suggest that although family firms are likely to offer higher dividend payout than non-family firms, family-managed firms are likely to offer lower dividend payout than professional-managed family firms. Moreover, the shares of owner family strengthen the negative relationship, while the shares of powerful non-family shareholders weaken the negative relationship between family-managed firms and dividend payout.