Corporate Governance and Dividend Policy in Emerging Markets
Brigham Young University - J. Willard and Alice S. Marriott School of Management
Emerging Markets Review, Vol. 5, pp. 409-426, December 2004
In a sample of 365 firms from 19 countries, I show that firms with stronger corporate governance have higher dividend payouts, consistent with agency models of dividends. In addition, the negative relationship between dividend payouts and growth opportunities is stronger among firms with better governance. I also show that firms with stronger governance are more profitable, but that greater profitability explains only part of the higher dividend payouts. The positive relationship between corporate governance and dividend payouts is limited primarily to countries with strong investor protection, suggesting that firm-level corporate governance and country-level investor protection are complements rather than substitutes.
Number of Pages in PDF File: 31
Keywords: Dividend policy, corporate governance, emerging markets
JEL Classification: G35, G34
Date posted: October 6, 2005