Conflict of interests among shareholders – does it refer to dividend decisions?

Abstract

Abstract Research background Agency theory refers to the conflict of interests between different groups involved in the business. One aspect of the agency theory is conflict among shareholders. One of the areas of potential conflict is dividend payment. Purpose The goal of our paper was to identify the impact of voting behaviour of shareholders during Annual General Meetings on dividend decisions. We make a comparison between big and small companies. Research methodology We included the 20 biggest and the 20 smallest companies from the Warsaw Stock Exchange (WSE) in our sample over the 2010–2022 period. We collected 413 observations (shareholders’ presence, voting results from annual general meetings, and financial data). We use statistical tests, a correlation analysis, and a regression analysis. Results: We found that in small companies there is conflict among large shareholders on dividend payout decisions, while in big companies small shareholders show their disappointment by voting against or abstaining from voting for financial statement acceptance (but not dividend payout decisions). Additionally, we found that the higher presence of large shareholders at the AGM the lower the dividend payout is. Novelty: The originality of the paper is that instead of ownership structure we took into account shareholders’ presence at AGM’s. We deal with a unique set of hand-collected data on voting results. We present new evidence on interests of conflict among shareholders (not only on dividend decisions). Although the problem of the conflict between minority and majority shareholders was identified, there is a scarcity of research on its background and implication.