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Impact of foreign institutional investors on dividend policy in Korea : A stock market perspective

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  • Impact of foreign institutional investors on dividend policy in Korea
  • Kang, Shinae; Sul, Wonsik; Kim, Soojung
  • Om Sai Ram Centre for Financial Management Research


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Title Impact of foreign institutional investors on dividend policy in Korea
Similar Titles
Sub Title

A stock market perspective

Material Type Articles
Author(English)

Kang, Shinae; Sul, Wonsik; Kim, Soojung

Publisher

[Bombay, India]:Om Sai Ram Centre for Financial Management Research

Date 2010-06
Journal Title; Vol./Issue Journal of Financial Management and Analysis:vol. 23(no. 1)
Pages 18
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Economy < Direct Investment
Government and Law < Governance
Holding SSRN

Abstract

This paper empirically investigates the impact of foreign institutional investors on corporate dividend policy in the Korean stock market. Using sample firms whose ownership by foreign investors was 5% or higher through the fiscal period from 2001 to 2007, we find that foreign institutional investors with more than 5% of a company’s shares can exert a significant impact on dividends. In addition, we find that the more shares that foreign institutional investors have over major shareholders and the more shares that foreign institutional investors have over the previous year, the stronger the impact of foreign institutional investors have on corporate dividend policy. This study empirically shows the impact of foreign institutional investors from the viewpoint of corporate governance in Korea, where local institutional investors play inadequate roles as stakeholders. It also complements the methodological problems pointed out in previous studies by applying a panel model.