Firm-level governance quality and dividend decisions: evidence from India
by P. Krishna Prasanna
International Journal of Corporate Governance (IJCG), Vol. 5, No. 3/4, 2014

Abstract: Motivated by the outcome model of agency theory, the primary research issue addressed in this paper is to measure firm-level governance quality of Indian firms and examine its impact on dividend payment decision and payout-level decision. The companies with higher corporate governance quality have higher dividends payout ratios. It was found that board size, independence, monitoring quality, and managerial remuneration had positive impact on dividend payout. Insiders' (promoter directors) equity holding had a negative impact on dividend payout; whereas, the share holding of outside owners had a positive impact. The results support the outcome model proposed by La Porta et al. (2000a, 2000b) and infer that better governed companies tend to have higher payout ratios. The results also provide positive evidence about the impact of recent corporate governance reforms introduced in India.

Online publication date: Thu, 30-Apr-2015

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