Does the contribution of dividend to firm value depend on controlling shareholders ?

The aim of this paper is to investigate the effects of the degree of control of large shareholders on the relation between dividend payout and firm value creation. From the perspective of agency theory, dividend payout is highly appreciated for firms subject to highly agency problems. Using a sample of 275 firm-years listed on the Tunisian Stock Exchange over the period 1998-2007, our results show that contrary to agency theory predictions, dividend payout of Tunisian firms contributes more to value creation when the firm has low agency conflicts. We find a positive and highly coefficient for the payouts of firms with shared control and with majority financial institution control. These results may be interpreted through the trust assigned by Tunisian investors to firms that have low agency problems. Our results also indicate a strong positive relationship between the return on assets, the level of debt and firm value. Finally, we document a negative relationship between the financial business sector and firm value.