Dividends, liquidity and shareholder activism

Dividends, liquidity and shareholder activism

 

A recent study "Relationship between  Liquidity and Shareholder Activism  " (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1344407 ) shows that since Blockholders’ incentives to intervene in corporate governance are weakened by free-rider problems and high costs of activism; liquidity helps overcome the free-rider problem and induces activism via pre accumulation of target firms’ shares.  

Authors of the Study: * Oyvind Norli  BI Norwegian Business School - Department of Financial Economics; BI Norwegian Business School, BI Norwegian Business School; Central Bank of Hungary, ; Charlotte Ostergaard , BI Norwegian Business School Ibolya Schindele BI Norwegian Business School; Central Bank of Hungary

Illegal distribution of dividends. Company Law, Bankruptcy Law. Spain

Illegal distribution of dividends. Spain

The dividend distribution agreement is an act of equity disposal in that it recognizes a right in favor of the partners, and  carries a reduction in the assest of the  company. It may be subject to revision if it is adopted two years before the bankruptcy declaration and it lacks justification from the perspective of the interests protected in bankruptcy law. TS decision  no. 428/2014, of 24July.

Dividends of a company subsequently declared bankrupt may constitute an act of disposal of equity harmful to the company:

• if it was agreed without due justification, thus violating Company Law ...
• if the  distribution agreements was "irregular"  because it was based entirely or partially in nonexistent net benefits,
• or because it was agreed without  respecting legal and statutory rules on reserves, or without due account of  the provisions of art. TRLSA 213 (current art. 273 TRLSC).

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