Finance professor to discuss research on ethics and dividend policy on March 8

MALVERN, Pa. — Stockholders entrust executives or “agents” to act on their behalf and make decisions, but what happens if they don’t have shareholders’ best interests in mind?

After examining sample data from 1,500 companies over the course of 10 years, Pornsit Jiraporn, associate professor of finance at Penn State Great Valley, tackles this question in his recent paper, “How do independent directors view dividend payouts? Evidence from a quasi-natural experiment.”

Jiraporn will discuss the relationship between agencies and dividend policy to the public at his presentation “Corporate profit: ethical decision making and dividend policy” from noon to 1 p.m. on Wednesday, March 8, in the Main Building.

According to Jiraporn, decisions about payment of dividends to shareholders can be complex. When companies profit, they can either reinvest money within the company or distribute cash to shareholders. In an effort to maintain control, some managers may prefer to keep the profit inside the firm rather than dispense large dividend payouts. Retaining profit instead of returning it to shareholders can result in conflict within the company.

Jiraporn will also explore the Sarbanes-Oxley Act of 2002 (SOX) and how it affects dividend policy. As a response to malpractice cases like the Enron scandal of 2001, SOX was created to protect investors from fraudulent accounting activities by corporations.

Jiraporn received his doctorate in finance from Southern Illinois University. He has an MBA from the University of Texas in Arlington and a bachelor’s degree in industrial engineering from Chulalongkorn University in Bangkok. Prior to joining Penn State Great Valley, he taught at Texas A&M International University in Laredo, Texas.

This presentation is relevant to individuals employed in the financial services industry, interested in finance regulation, or simply curious about the impact of decision-making on a 401(k) account. Admission is free, but advanced registration is required. For more information, visit the Penn State Great Valley website.