Ownership Structures

This chapter details how ownership structures evolved, starting from the early stages of a company to unfolding over time as ownership invariably passed on from one generation to another. Examples are offered on how and under what circumstances companies go public and how founders recruit new owners when ready to pass on the company. Specifically covered are single ownership and family ownership. To provide ownership stability and ownership control, the text describes efforts to keep control within the founding family, ways of passing ownership on to another family, and the process of shareholder agreements. Examples are provided on how companies recruit new owners and how companies approach the decision to go public vs. remaining privately owned.

Achieving Ownership Stability

Stability of ownership is a big issue among SME owners. This chapter deals with strategies to preserve and guarantee ownership stability. The experience of founders and owners in applying foundation structures are described. Approaches to provide ownership stability as a public company are described. Special situations covered are employee ownership, and how to maintain stability in ownership with private investors. Examples are provided for situations when ownership stability fails. Finally, the chapter concludes with a differentiation between independence of a firm vs. autonomy in making key decisions.

Institutional ownership stability and dividend payout policy

Purpose The purpose of this paper is to empirically examine the link between institutional ownership stability and dividend payout ratio. Design/methodology/approach First, the authors estimate the propensity of a firm to pay dividend. Next, the authors perform panel fixed-effect regressions of dividend payouts on institutional ownership stability variables. The authors also compare institutional ownership between dividend paying and non-dividend paying investee firms. The authors analyze the dividend preferences of different types of institutional owners. Finally, the authors examine the cross-sectional variation in the volatility of dividend payouts. Findings The authors find that stable and large institutional owners favor dividend paying companies. There also exists a positive association between ownership persistence and dividend payout. Conversely, firms that change their dividend payout frequently are associated with larger deviations in institutional ownership. Additionally, the presence of pressure-sensitive institutional investors (i.e. investors that also hold business ties with the investee firm) is significantly linked to dividend payout policy. Conversely, pressure-insensitive investors use alternative forms of monitoring instead of requiring investee firms to pay dividends, which serve to reduce agency conflicts. Originality/value This paper considers the preferences of long-term stable institutional investors in their selection of dividend paying firms.