Investigating the effects of institutional ownership provinces on financial leverage and dividend policy in companies listed on the Tehran Stock Exchange

Subject Areas : Financial engineering

mehrdad rafizadeh ¹ , hamidreza kordlouie ² , Mohsen Hashemighohar ³ , Shadi Shahverdiani ⁴

1 - Department of Financial Engineering, Shahr-E-Qods Branch, Islamic Azad University, Tehran, Iran
2 - Department of Finance, Ealamshar Branch, Islamic Azad university, Tehran, Iran and member of Modern Financial Risk Research Group
3 - Department of Accounting, Shahr-E-Qods Branch, Islamic Azad University, Tehran, Iran
4 - Department of Business Management, Shahr-E-Qods Branch, Islamic Azad University, Tehran, Iran.

Received: 2021-11-07 Accepted : 2021-11-30 Published : 2022-09-23

Keywords: Financial Leverage, Institutional Ownership, dividends paid, threshold effects,

Abstract :

Institutional ownership is one of the corporate governance mechanisms, not only because of its expertise and knowledge, they have a better supervisory role over managers, which can also be effective in aligning important company decisions with their own interests. The main question of the research is how institutional shareholders in terms of ownership thresholds influence managers' decisions regarding financial leverage and dividends paid. In the present study, 143 companies have been selected in the period 2013-2019. The research findings show that the impact of the institutional shareholder on the financial leverage is the result of two values of institutional ownership thresholds and as a result three different behavioral regimes for the financial leverage. In the first and second behavioral regimes, institutional ownership has a negative and significant effect on financial leverage, which intensifies with increasing ownership; However, in the amount of institutional ownership above the second threshold, In relation to the effect of institutional ownership on dividends paid, a threshold value has been identified that in both regimes, the effect of institutional ownership on dividends paid is positive and significant, but in high values of the threshold amount, the impact factor shows a significant increase.