Does Corporate Governance Have a Say on Dividends in Australian Listed Companies?

Title
Does Corporate Governance Have a Say on Dividends in Australian Listed Companies?
Publication Date
2021
Author(s)
Farooque, Omar Al
( author )
OrcID: https://orcid.org/0000-0002-6346-1125
Email: ofarooqu@une.edu.au
UNE Id une-id:ofarooqu
Hamid, Ali
Sun, Lan
Abstract
This paper also published in SSRN under the title "Does Governance Structure Have a Say on Dividend? Evidence from Australian Listed Firms" (doi:10.2139/ssrn.3525826)
Type of document
Journal Article
Language
en
Entity Type
Publication
Publisher
University of Wollongong, School of Accounting, Economics and Finance
Place of publication
Australia
DOI
10.14453/aabfj.v15i4.4
UNE publication id
une:1959.11/31924
Abstract

This paper investigates whether corporate governance has an impact on dividend policy in Australian listed firms. The empirical studies of corporate governance and dividend policy in the Australian context tend to have a limited scope and the findings are mixed. Unlike the existing literature, this paper provides a more comprehensive examination of the relationship between dividend policy and corporate governance mechanisms. Using a sample of 1,438 firm-year observations for the period of 2005 to 2011 and the panel data approach, this study finds that dividend payout is significantly positively (negatively) correlated with board size, board independence, institutional ownership and use of a Big-4 audit firm (CEO duality and managerial ownership). Moreover, dividend yield is significantly positively (negatively) correlated with managerial ownership (foreign ownership). These findings suggest that dividend policy and corporate governance mechanisms are complementary i.e. firms paying higher dividends are more likely to engage in good governance practices as well as having strong monitoring and control systems in place and therefore both dividend policy and corporate governance are considered as effective tools in reducing agency costs.

Link
Citation
Australasian Accounting Business and Finance Journal, 15(4), p. 47-75
ISSN
1834-2019
1834-2000
Start page
47
End page
75

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