Corporate governance and dividend policy in emerging markets

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 gove...

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Bibliographic Details
Published in:Emerging markets review 2004-12, Vol.5 (4), p.409-426
Main Author: Mitton, Todd
Format: Article
Language:English
Subjects:
Corporate governance
Dividend policy
Emerging markets
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Summary: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.
ISSN:1566-0141
1873-6173
DOI:10.1016/j.ememar.2004.05.003