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Corporate Governance And Dividend Payout Policy: Beyond Country‐Level Governance

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  • Bin Chang
  • Shantanu Dutta
  • Samir Saadi
  • PengCheng Zhu

Abstract

We address the mixed empirical findings on how corporate governance affects dividend payout policy by analyzing a large sample of firms from 30 countries. Our results indicate that firms with better firm‐level governance pay more dividends, even after controlling for country‐level governance. However, this relation is pronounced only in countries with low shareholder rights. In addition, we find that when the shareholder rights index is high, firm‐level governance is unrelated to dividend payout in the full sample period. Finally, we show that in high‐shareholder‐rights countries, firm‐level governance changes its role from before to after the 2008–2009 financial crisis.

Suggested Citation

  • Bin Chang & Shantanu Dutta & Samir Saadi & PengCheng Zhu, 2018. "Corporate Governance And Dividend Payout Policy: Beyond Country‐Level Governance," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 41(4), pages 445-484, December.
    • Handle: RePEc:bla:jfnres:v:41:y:2018:i:4:p:445-484
    DOI: 10.1111/jfir.12159
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    Cited by:

    1. Herron, Richard & Platt, Katarzyna, 2021. "World dividends and tax shocks," Global Finance Journal, Elsevier, vol. 47(C).
    2. Richard Herron, 2022. "Payout policy and the interaction of firm-level and country-level governance," Review of Quantitative Finance and Accounting, Springer, vol. 58(1), pages 1-39, January.
    3. Hussain, Tanveer & Loureiro, Gilberto, 2022. "Portability of firm corporate governance in mergers and acquisitions," Research in International Business and Finance, Elsevier, vol. 63(C).
    4. Dan Lin & Lu Lin, 2020. "Does Corporate Governance Affect the Critical Corporate Policies such as Dividend Policy?," International Journal of Economics and Financial Issues, Econjournals, vol. 10(6), pages 18-24.
    5. Yang, Bao & Chou, Hsin-I. & Zhao, Jing, 2020. "Innovation or dividend payout: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 68(C), pages 180-203.
    6. Thomas J.Flavin & Abhinav Goyal & Thomas O'Connor, 2020. "Role of corporate governance and lifecycle in determining payout precommitment in an emerging economy," Economics Department Working Paper Series n297-20.pdf, Department of Economics, National University of Ireland - Maynooth.
    7. David Blanco‐Alcántara & Jorge Gallud‐Cano & Félix J. López‐Iturriaga & Óscar López‐de‐Foronda, 2022. "Have European banks maintained their payout policy during the crisis? The role of scrip dividends," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 4619-4632, October.
    8. Thomas Flavin & Abhinav Goyal & Thomas O'Connor, 2021. "Corporate governance, life cycle, and payout precommitment: An emerging market study," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 44(1), pages 179-209, April.
    9. Suman, Samridhi & Singh, Shveta, 2022. "The Role of Multiple Large Shareholders in Dividend Payouts: Evidence from India," American Business Review, Pompea College of Business, University of New Haven, vol. 25(1), pages 120-151, May.

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