Corporate governance and dividend policy of the US and Indian companies

Sunaina Kanojia () and Bunny Singh Bhatia ()
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Sunaina Kanojia: University of Delhi
Bunny Singh Bhatia: University of Delhi

Journal of Management & Governance, 2022, vol. 26, issue 4, No 9, 1339-1373

Abstract: Abstract The paper examines the relationship between corporate governance and dividend payout, using a sample of Indian and US listed firms. In contrast with the substitution hypothesis, but in line with the outcome hypothesis, this study documented that companies with good corporate governance pay higher dividends than companies with weak corporate governance. Specifically, board independence, board size and institutional ownership are the key corporate governance drivers of dividend payout in US firms, while none of the individual corporate governance parameters is significantly associated to dividend payout in for Indian firms. An investor can use this information to make an investment decision. Financial Regulators need to improve corporate governance framework to enhance the disbursement of dividend and mitigate the agency problem. Companies need to consider the signalling effect of dividend payments while framing their dividend policy in both countries.

Keywords: Signalling; Corporate Governance; Dividend Payout; India; Board Independence; Institutional ownership (search for similar items in EconPapers)
JEL-codes: G30 G32 G35 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s10997-021-09587-5

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