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

2021 ◽  
Vol 15 (4) ◽  
pp. 47-75
Author(s):  
Omar Al Farooque ◽  
Ali Hamid ◽  
Lan Sun
Keyword(s):  
Corporate Governance ◽  
Dividend Policy ◽  
Good Governance ◽  
Empirical Studies ◽  
Managerial Ownership ◽  
Monitoring And Control ◽  
Governance Mechanisms ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
Governance Practices

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.

Governance of Financial Institutions

2018 ◽  
Author(s):  
Guler Aras
Keyword(s):  
Corporate Governance ◽  
Financial Institutions ◽  
Capital Markets ◽  
Financial Services ◽  
Good Governance ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Governance Practices ◽  
The 2008 Financial Crisis ◽  
Sustainable Economic Growth

Corporate governance is a central issue in business and economics. However, governance in financial institutions is more complicated than in other fields because of the nature of financial services and instruments. Financial organizations are similar to other businesses in terms of their purposes of establishment, but confidence in management and complex risk structures are more important in financial organizations than in other businesses. In financial institutions, there are various areas in which problems arise that are related to corporate governance, including the agency problem and stakeholder protection. The importance of good governance for sound performance of financial institutions was reconfirmed during the 2008 financial crisis, raising the need to understand the agency problems and the efficiency of various corporate governance mechanisms in mitigating them. International organizations, such as the Organisation for Economic Co-operation and Development, the Basel Committee, the International Finance Corporation, and the International Organization of Securities Commissions, have been working with regulators and policy makers to improve corporate governance practices both in nonfinancial and financial institutions. Corporate governance, especially in financial institutions, is essential in guaranteeing a sound financial system, capital markets, and sustainable economic growth. Governance weaknesses at financial institutions can result in the transmission of problems across the finance sector and the economy. Consequently, the effectiveness of governance mechanisms of financial institutions and capital markets after financial crises had significant importance in a period that witnessed an intensive discussion of corporate governance issues with new regulations and the related academic works.

scholarly journals Dividend policy and corporate governance in Saudi stock market: Outcome model or substitute model?

2015 ◽  
Vol 12 (2) ◽  
pp. 74-91 ◽  
Author(s):  
Amina Hamdouni
Keyword(s):  
Corporate Governance ◽  
Cash Flow ◽  
Dividend Policy ◽  
Good Governance ◽  
Free Cash Flow ◽  
Ownership Concentration ◽  
Board Structure ◽  
Governance Mechanisms ◽  
Corporate Governance Mechanisms ◽  
Debt Policy

Theories suggest that corporate governance mechanisms affect corporate dividend policies. This study extends and tests the implications of two extant static agency models making opposite predictions. The outcome model predicts an increase in dividends when the corporate governance mechanisms improve, because shareholders are better able to force managers to disgorge cash. In contrast, the substitute model suggests that an improvement in the corporate governance mechanisms reduces the role of dividends in controlling agency costs, leading to a decrease in dividends. This paper investigates the dividend policy for firms listed on Saudi Arabia Stock Exchange. This is a case study of Saudi Stock Market, where the determinants of dividend policy have received little attention. This study use a panel dataset of non-financial firms listed on Saudi Arabia Stock Exchange between the years of 2007 and 2010. Based on a panel of 366 firm year observations of 99 Saudi firms, we provide evidence in outcome model or substitute model with ownership structure, board structure and debt policy. Three Tobit models are specified: In the first, we construct a governance index based on eight criteria: seven criteria which capture various aspects of a firm’s structure, policies and practices that constitute good governance and a criterion that examines the company’s compliance with Shariah law in all its activities. Therefore, we estimate the effect of corporate governance on dividend policy in the first model. In the second, we investigate how dividends interact with corporate governance mechanisms in a panel of data. We explore the relation between dividends and ownership structure (ownership concentration and managerial ownership), board structure (board size, Board independence and Chairman-CEO duality) and debt policy. In the final, another test of the substitute and the outcome models is built on the Jensen (1986) free cash flow theory, which states that dividend policy can extract surplus cash from management control by reducing free cash flow. In this third model, we examine how corporate governance improvements affect the dividends’ sensitivity to free cash flows by focusing on the coefficients on the interactive variables of the ownership structure, board structure, debt policy and the free cash flow. For the three models, we divide sample in two subsamples and we compare the results obtained by using criteria of company’s compliance with Shariah law. For the effects of corporate governance (measured by corporate governance score) on dividend levels, we find that dividend policy is a substitute model for good governance for all Saudi Arabia firms. When we select only Shariah compliant firms, results indicate also that dividend policy is a substitute model for good governance but results are insignificant. When we select only Non-Shariah compliant firms, results indicate the same conclusion. We find that governance is associated with fewer dividends, supporting the substitute model and indicating the influence of good governance by forcing less cash to be returned to investors. For the effects of corporate governance mechanisms on dividend levels, we find that the only variable affect the dividend levels for Non-Shariah compliant firms is the separation in the functions of chairman and of CEO supporting the substitute model. For Shariah compliant firms, dividend policy is an outcome for the separation in the functions of chairman and of CEO, and ownership concentration. Governance through the separation in the functions of chairman and of CEO and ownership concentration influences firms by forcing more cash to be returned to investors. For the effects of the corporate governance improvements on dividends’ sensitivity to free cash flow, our results support the substitute hypothesis for Shariah compliant firms regardless the board independence, board meeting, managerial ownership and debt. Improvements in these corporate governance mechanisms reduce firms’ need to force out the free cash flow through dividends. For Non-Shariah compliant firms, our results support the outcome model for managerial ownership and ownership concentration

DO OWNERSHIP CONCENTRATION AND THE BOARD OF DIRECTORS AFFECT EXPORTS?

2021 ◽  
Vol 22 (3) ◽  
Author(s):  
VITOR F. M. B. DIAS ◽  
MICHELE A. CUNHA ◽  
FERNANDA M. PEIXOTO ◽  
DUTERVAL JESUKA
Keyword(s):  
Corporate Governance ◽  
Good Governance ◽  
Optimal Level ◽  
Board Composition ◽  
Exporting Firms ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
Dependent Variables ◽  
Governance Practices ◽  
The Board Of Directors

ABSTRACT Purpose: To investigate whether the shareholder concentration and the board composition influence the export of Brazilian listed firms from 2010 to 2017. Originality/value: The study contributes to the literature on exports and corporate governance by highlighting that companies with good governance practices, measured by the board composition and ownership/control structure, might increase their exports. This research can serve as a guide for companies to structure their boards in order to positively influence exports and improve performance. In addition, the study raises the question of what would be the “optimal level” of firms’ shareholding concentration in order to improve the decision-making process involved in choosing to expand borders through export. Design/methodology/approach: The study performed logistic regression (logit model) and regression with the censored dependent variable (tobit model). Propensity to export and intensity of export were used as dependent variables. The logit regressions involved a sample of 307 exporting and non-exporting companies, and the tobit regressions involved a sample of 61 exporting firms. Findings: We found a positive relationship between board independence and exports, that is, the greater presence of independent members on the board, the higher the export level of firms. We also found that there is a non-monotonic relationship between shareholder concentration and level of exports. In summary, the study suggests that some corporate governance mechanisms may act as antecedents for firms’ export practices.

scholarly journals CORPORATE GOVERNANCE PRACTICES AND ITS EFFECT ON CORPORATE FINANCIAL PERFORMANCE: A PRAGMATIC EVIDENCE FROM MALAYSIA

2020 ◽  
Vol 3 (01) ◽  
pp. 177-194
Author(s):  
Muhammad Tahir Khan ◽  
Haseeb Ur Rehman ◽  
Arsalan Arsalan Hashmi
Keyword(s):  
Corporate Governance ◽  
Good Governance ◽  
Governance Structure ◽  
Governance Mechanism ◽  
Governance Mechanisms ◽  
Corporate Scandals ◽  
Corporate Governance Mechanisms ◽  
Governance Practices ◽  
Financial Scandals ◽  
External Governance

Current corporate governance failure and financial scandals are the reason for the governance mechanism due to ignoring the adoption of governance mechanisms in corporate practices. The main objective of the paper is to investigate the association between governance mechanism corporate performances based on extant literature and to put a light on the current governance mechanism in the Malaysian firms. This paper emphasizes the compliance of governance mechanism and the role of MCCG in improving the performance of corporate firms. This paper highlights the issues, current corporate scandals, and failure of corporate governance mechanisms in the first and second decades of the 21st century. Various scandals and misconduct are discussed to report the problems allied to corporate governance. This paper addresses the various corporate governance theories, models, and good governance structure. The internal and external governance mechanisms have been discussed in detail to put a light on its influence on corporate performance

scholarly journals The relationship between corporate governance mechanisms and the performance of Saudi listed firms

2017 ◽  
Vol 14 (2) ◽  
pp. 338-349 ◽  
Author(s):  
Mamdouh Abdulaziz Saleh Al-Faryan
Keyword(s):  
Corporate Governance ◽  
Saudi Arabia ◽  
Chief Executive Officer ◽  
Empirical Studies ◽  
Chief Executive ◽  
Direct Consequence ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
Governance Practices ◽  
Code Of Corporate Governance

This paper gauges, both qualitatively and quantitatively, the pertinent variables to corporate governance practices and their relationship to business productivity in the context of the Kingdom of Saudi Arabia. This study was conducted in response to the limited literature in this context. A new code of corporate governance was issued by the Saudi Arabian Capital Market Authority as a direct consequence of the 2006 stock market crash; in 2010, the code was made mandatory for listed firms. Rigorous empirical studies are practical not only for Saudi Arabia and its policy makers but also potentially for solving global investment issues and ensuring security. This study found two variables to have a significant negative relation: chief executive officer turnover and independent board members. Thus, greater rates of chief executive officer turnover are associated with negative firm performance. In addition, independent board directors’ negative value was found to be very close to zero and significant only at the 10% level. Consequently, some caution is required when considering this result.

scholarly journals How do corporate governance mechanisms affect a firm’s potential for bankruptcy?

2015 ◽  
Vol 5 (1) ◽  
pp. 61-70
Author(s):  
Rhesa Theodorus Hanani ◽  
Christiana Fara Dharmastuti
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Stock Exchange ◽  
Managerial Ownership ◽  
Governance Mechanisms ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
Vector Decomposition ◽  
Negative Effect ◽  
Positive Effect

The purpose of this thesis is to understand the effects of corporate governance mechanisms on the potential for bankruptcy. This study is done by utilizing the linear regression fixed effect vector decomposition model on 30 listed firms from the consumer goods sector of Indonesia Stock Exchange during the 2010-2012 periods. The results of the study indicate that: the board of commissioners’ independence and size of the commissioners’ board pose a significant positive effect on the potential for bankruptcy; the presence of an audit committee and the presence of a nomination and remuneration committee pose a significant negative effect and institutional ownership and managerial ownership do not significantly affect the potential for bankruptcy.

scholarly journals Corporate Governance And Voluntary Disclosure In France

2013 ◽  
Vol 29 (2) ◽  
pp. 561 ◽  
Author(s):  
Carlos P. Barros ◽  
Sabri Boubaker ◽  
Amal Hamrouni
Keyword(s):  
Corporate Governance ◽  
Voluntary Disclosure ◽  
Audit Committee ◽  
Audit Quality ◽  
Annual Reports ◽  
Managerial Ownership ◽  
Board Meeting ◽  
External Audit ◽  
Listed Firms ◽  
Governance Practices

This paper investigates the effect of corporate governance practices on the extent of voluntary disclosure in France. Using a panel of 206 non-financial French listed firms during the period 20062009, we find evidence that voluntary disclosure in annual reports increases with managerial ownership, board and audit committee independence, board meeting frequency, and external audit quality. We also find that frequency of audit committee meetings and diligence of board and auditing are associated with decreased disclosure. Additional findings show that larger, more profitable, and less indebted firms have greater voluntary disclosure.

Corporate governance and risk in cross-listed and Canadian only companies

2019 ◽  
Vol 57 (10) ◽  
pp. 2740-2757 ◽  
Author(s):  
Atreya Chakraborty ◽  
Lucia Gao ◽  
Shahbaz Sheikh
Keyword(s):  
Corporate Governance ◽  
Differential Effect ◽  
Composite Index ◽  
Governance Mechanism ◽  
Firm Risk ◽  
Governance Mechanisms ◽  
Content Type ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
The Impact

Purpose The purpose of this paper is to investigate if there is a differential effect of corporate governance mechanisms on firm risk in Canadian companies cross-listed on US markets and Canadian companies not cross-listed (Canadian only companies). Design/methodology/approach Using a sample comprised of all Canadian companies included in the S&P/TSX Composite Index for the period 2009–2014, this study applies OLS and fixed effect regressions to investigate the effect of corporate governance mechanisms on firm risk. Interaction variables between governance mechanisms and the cross-listing status are used to examine if this effect is different for cross-listed firms. Findings Results indicate that the effect of board characteristics such as size, independence and proportion of female directors remains the same in both cross-listed and not cross-listed firms. CEO duality and insider equity ownership impact firm risk only in cross-listed companies, while institutional shareholdings, environmental, social and governance disclosure and family control affect firm risk in Canadian only firms. Overall, the empirical results indicate that some governance mechanisms impact firm risk only in firms that cross-list, while others are well-suited for Canadian only firms. Practical implications This study suggests that some of the differences between Canadian companies that cross-list and the Canadian companies that do not cross-list in US stock markets may change the impact of governance mechanisms on firm risk. Therefore, these findings have important implications for the design of governance mechanisms in Canadian firms. Since some of these differences are common to other economies, the conclusions can be extended to companies in other countries with similar governance structures. Originality/value Although previous studies have investigated the effect of governance mechanism on firm risk, this is the first paper that studies the differential effect for companies that cross-list in US markets. Specifically, differences in the ownership structure, firm control and in the regulatory and institutional environment, may explain this differential effect. Unlike most of the previous studies that focus on the effect of individual governance mechanisms, this study uses several mechanisms and their interactions at the same time.

The Impact of Corporate Governance Mechanisms on the Relationship Between Cash Holdings and Audit Fees in Egyptian Listed Companies

2019 ◽  
Vol 9 (2) ◽  
pp. 314
Author(s):  
Eman Abdel-Wanis
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Panel Data Analysis ◽  
Cash Holdings ◽  
Audit Fees ◽  
Governance Mechanisms ◽  
Listed Firms ◽  
Corporate Governance Mechanisms ◽  
The Impact ◽  
The Relationship

This paper explores the impact of corporate governance mechanisms on the nature of the relationship between cash holdings and audit fees, which helps provide an opportunity to identify whether these mechanisms enable to mitigate agency problems, and thus lower audit fees through a sample of 78 Egyptian listed firms in EGX 100 during the period 2014-2016 using panel data analysis. Results indicated that cash holding increases auditing fees. The board characteristics affect negatively on the relationship between cash holdings and audit fees. Also, ownership structure affects negatively on the relationship between cash holdings and audit fees. As well audit committee affects negatively on the relationship between cash holdings and audit fees. There results support the view that corporate governance mitigate on the relationship between cash holdings and audit fees.

scholarly journals Corporate Governance and Dividend Policy in the Presence of Controlling Shareholders

2020 ◽  
Vol 13 (8) ◽  
pp. 162
Author(s):  
Ricardo Rodrigues ◽  
J. Augusto Felício ◽  
Pedro Verga Matos
Keyword(s):  
Corporate Governance ◽  
Data Analysis ◽  
Panel Data ◽  
Agency Theory ◽  
Dividend Policy ◽  
Panel Data Analysis ◽  
Free Cash Flow ◽  
Governance Mechanisms ◽  
Controlling Shareholders ◽  
Listed Firms

Based on agency theory, we focused on the influence of corporate governance in the dividend policy of large listed firms with headquarters in continental Europe countries. Previous research focused on the influence of corporate governance on the performance and risk of listed firms, but the influence of corporate governance on the dividend policy has rarely been addressed despite the importance of dividends for shareholders and the implications on the free cash-flow, whose application may be a source of conflicts between managers and shareholders. In this paper, we study the influence of a set of governance mechanisms on the dividend policy over 12 years (2002 to 2013). The results, based on a panel data analysis, support the importance of governance mechanisms toward the protection of shareholders’ interests, and reveal that the decisions on whether to pay dividends and how much to pay are grounded on different antecedents.

Sign in / Sign up

Export Citation Format

Share Document