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Corporate Governance and Dividend Reinvestment Plans: Insights from Imputation Tax in Australia

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  • Shamsabadi, Hussein Abedi
  • Tebourbi, Imen
  • Nourani, Mohammad
  • Min, Byung S.

Abstract

This paper investigates the supply of Dividend Reinvestment Plans (DRPs) in relation to corporate governance and imputation tax system in Australia. Since DRPs are popular among large firms, we compiled the data of 300 largest companies listed on the Australian stock exchange (ASX300) during 2001-2013. Tobit regression method is used to estimate the models. Results indicate that good corporate governance leads to the higher supply of DRPs. We also found that franked dividend and heavily discounted DRPs weaken the positive association between governance and DRPs, illustrating the importance of institutional settings. Our findings imply that good corporate governance should consider a variety of clientele demands for dividend policy.

Suggested Citation

  • Shamsabadi, Hussein Abedi & Tebourbi, Imen & Nourani, Mohammad & Min, Byung S., 2021. "Corporate Governance and Dividend Reinvestment Plans: Insights from Imputation Tax in Australia," Finance Research Letters, Elsevier, vol. 41(C).
    • Handle: RePEc:eee:finlet:v:41:y:2021:i:c:s154461232031624x
    DOI: 10.1016/j.frl.2020.101810
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    More about this item

    Keywords

    Dividend reinvestment plans; Corporate governance; Imputation tax; Dividend policy; Australia;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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