DIVIDEND PAYOUTS: MAJORITY CONTROL AND RENT EXTRACTION

Optimal Dividend Payouts under Jump-diffusion Risk Processes

This article considers the dividend optimization problem for an insurer with a jumpdiffusion risk process in the presence of fixed and proportional transaction costs. Due to the presence of a fixed transaction cost, the mathematical problem becomes an impulse stochastic control problem. Using a stochastic impulse control approach, we transform the stochastic control problem into a quasi-variati...

Rent Extraction by Capitalists

The capital income share exceeds the capital output elasticity if capital owners extract rents. Based on a sample of 111 countries during the period 1970-2010, this paper provides estimates of the capital output elasticity and compares these to countries' capital income shares. Three findings arise: (i) for the average country in the sample, the capital income share significantly exceeds the ca...

Majority support of shareholders, monitoring incentive, and dividend policy

Article history: Received 5 January 2014 Received in revised form 12 October 2014 Accepted 13 October 2014 Available online 28 October 2014 As an alternative version of the side-payment model, this paper presents a demonstration of how the necessity of winning majority support of shareholders influences the relation between a blockholder's monitoring incentive and a firm's dividend policy. When...

Rent Control

Search Diversion, Rent Extraction and Competition

This paper studies search diversion by competing intermediaries connecting consumers with third-party stores. First, we show that endogenizing store entry leads to more search diversion when intermediaries cannot price discriminate among stores because the intermediaries’ incentives are aligned with the marginal stores. Second, competition among intermediaries may lead to more or less search di...