Family firms and cash dividends in Kuwait

Abstract EN

The purpose of the paper is to investigate whether family firms have higher or lower cash dividend payouts than nonfamily firms.

In addition, it aims to identify the determinants of family firms that distribute cash dividends.

Based on a sample of Kuwaiti publicly listed firms over the period 2003-2008, we find that family firms have lower cash dividends than nonfamily firms.

This evidence suggests that majority shareholders, i.e., families, tend to extract minority shareholders wealth, which provides support for the entrenchment hypothesis.

Furthermore, results show that older, highly leveraged, and less profitable family firms distribute less cash dividends than younger, lowly leveraged and more profitable family firms