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JOURNAL OF ACCOUNTING AND FINANCE
Dividends, Executive Compensation, and Agency Costs: Empirical
Evidence from Germany
Author(s): Nalinaksha Bhattacharyya, Julie Ann Elston
Citation: Nalinaksha Bhattacharyya, Julie Ann Elston, (2011) "Dividends, Executive Compensation, and Agency Costs: Empirical Evidence from Germany" Vol. 11, Iss. 1, pp. 11 - 20
Article Type: Research paper
Publisher: North American Business Press
Abstract:
This study provides evidence on the relationship between dividend payout ratios and executive
compensation in Germany. Results suggest that the role of dividends in resolving agency issues
is relevant not only in market based systems like North America, but also in bank based systems
like Germany, where agency issues appear to be partially mitigated by the influence of banks.
Bank influence is also found to be positively related to dividend payout ratio and thus consistent
with the Free Cash Flow Hypothesis of Jensen (1986) and Easterbrook (1984).
