Simultaneous determination of Debt, Dividend, and Inside Ownership policies: Evidence from Sweden
Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
The main purpose of this thesis is to examine the simultaneous determination of debt, dividend, and inside ownership policies in Sweden. We apply a simultaneous equation model estimated with 3SLS. The results reveal a positive two-way causal relationship between debt and dividend polices. We also find a two-way causal relationship between inside ownership and dividend policies, but dividends affect inside ownership in a positive way while inside ownership affects dividends in a negative way. Further, we find a relationship between inside ownership and debt policies, but any causality appears to run from inside ownership to debt in a negative way. This study supports the notion that the convergence of interest and the entrenchment theory are not mutually exclusive. We also show that a SEM estimated with 3SLS is justified empirically over the OLS and that the difference between using 3SLS compared to 2SLS is negligible in our model.
Place, publisher, year, edition, pages
2014. , 11 p.
Dividend policy, Debt policy, Capital structure, Inside ownership, Agency theory, Convergence of interest theory, Entrenchment theory, Simultaneous equations
Utdelningspolicy, Kapital struktur, Agent teori
IdentifiersURN: urn:nbn:se:miun:diva-21129OAI: oai:DiVA.org:miun-21129DiVA: diva2:690415
Subject / course
Salman, A. Khalik, Professor
Norén, Ronny, Docent