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Firm-level governance quality and dividend decisions: evidence from India

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  • P. Krishna Prasanna

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.

Suggested Citation

  • P. Krishna Prasanna, 2014. "Firm-level governance quality and dividend decisions: evidence from India," International Journal of Corporate Governance, Inderscience Enterprises Ltd, vol. 5(3/4), pages 197-222.
    • Handle: RePEc:ids:ijcgov:v:5:y:2014:i:3/4:p:197-222
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    Cited by:

    1. Adeel Mustafa & Abubakr Saeed & Muhammad Awais & Shahab Aziz, 2020. "Board-Gender Diversity, Family Ownership, and Dividend Announcement: Evidence from Asian Emerging Economies," JRFM, MDPI, vol. 13(4), pages 1-20, March.
    2. Ernest Gyapong & Ammad Ahmed & Collins G Ntim & Muhammad Nadeem, 2021. "Board gender diversity and dividend policy in Australian listed firms: the effect of ownership concentration," Asia Pacific Journal of Management, Springer, vol. 38(2), pages 603-643, June.
    3. Zahid Ali & Assad Ullah & Arshad Ali, 2019. "Board structure and dividend smoothing: A case of Pakistani listed firms," Business Review, School of Economics and Social Sciences, IBA Karachi, vol. 14(2), pages 65-91, July-Dece.
    4. Faozi A. Almaqtari & Hamood Mohd. Al-Hattami & Khalid M. E. Al-Nuzaili & Mohammed A. Al-Bukhrani, 2020. "Corporate governance in India: A systematic review and synthesis for future research," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1803579-180, January.

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