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Corporate Governance and Dividend Policy in Poland

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  • Oskar Kowalewski
  • Ivan Stetsyuk
  • Oleksandr Talavera

Abstract

This study examines the relation between corporate governance practices measured by Transparency Disclosure Index (TDI) and dividend policy in Poland. Our empirical approach, constructs measures of the quality of the corporate governance for 110 non-financial companies listed on Warsaw Stock Exchange between 1998 and 2004. We find evidence that an increase in the TDI or its subindices leads to an increase in the dividend-to-cash-flow ratio. These results support the hypothesis that companies with weak shareholder rights pay dividends less generously than do firms with high corporate governance standards. Therefore, minority shareholders often use power to extract dividends. We also find that large and more profitable companies have a higher dividend payout ratio, while riskier and more indebted firms prefer to pay lower dividends.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.60098.de/dp702.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 702.

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Length: 22 p.
Date of creation: 2007
Date of revision:
Handle: RePEc:diw:diwwpp:dp702

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Related research

Keywords: Corporate governance; dividend policy; agency theory;

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References

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  1. Shleifer, Andrei & Vishny, Robert W., 1986. "Large Shareholders and Corporate Control," Scholarly Articles 3606237, Harvard University Department of Economics.
  2. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, American Economic Association, vol. 76(2), pages 323-29, May.
  3. Black, Bernard S. & Jang, Hasung & Kim, Woochan, 2006. "Predicting firms' corporate governance choices: Evidence from Korea," Journal of Corporate Finance, Elsevier, Elsevier, vol. 12(3), pages 660-691, June.
  4. Chris Mallin, 2000. "Developments in Corporate Governance in Central and Eastern Europe," Corporate Governance: An International Review, Wiley Blackwell, Wiley Blackwell, vol. 8(1), pages 43-51, 01.
  5. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert Vishny, 1998. "Agency Problems and Dividend Policies Around the World," NBER Working Papers 6594, National Bureau of Economic Research, Inc.
  6. Paul A. Gompers & Joy L. Ishii & Andrew Metrick, 2001. "Corporate Governance and Equity Prices," NBER Working Papers 8449, National Bureau of Economic Research, Inc.
  7. Franklin Allen & Antonio E. Bernardo & Ivo Welch, 2000. "A Theory of Dividends Based on Tax Clienteles," Journal of Finance, American Finance Association, American Finance Association, vol. 55(6), pages 2499-2536, December.
  8. Ricardo N. Bebczuk, 2005. "Corporate Governance and Ownership: Measurement and Impact on Corporate Performance and Dividend Policies in Argentina," Research Department Publications, Inter-American Development Bank, Research Department 3212, Inter-American Development Bank, Research Department.
  9. La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert, 2000. "Investor protection and corporate governance," Journal of Financial Economics, Elsevier, Elsevier, vol. 58(1-2), pages 3-27.
  10. Larry H. P. Lang & Mara Faccio & Leslie Young, 2001. "Dividends and Expropriation," American Economic Review, American Economic Association, American Economic Association, vol. 91(1), pages 54-78, March.
  11. William Judge & Irina Naoumova, 2004. "Corporate Governance in Russia: what model will it follow?," Corporate Governance: An International Review, Wiley Blackwell, Wiley Blackwell, vol. 12(3), pages 302-313, 07.
  12. Bernard S. Black & Hasung Jang & Woochan Kim, 2006. "Does Corporate Governance Predict Firms' Market Values? Evidence from Korea," Journal of Law, Economics and Organization, Oxford University Press, Oxford University Press, vol. 22(2), pages 366-413, October.
  13. Easterbrook, Frank H, 1984. "Two Agency-Cost Explanations of Dividends," American Economic Review, American Economic Association, American Economic Association, vol. 74(4), pages 650-59, September.
  14. Allen, Franklin & Laura, Bartiloro & Oskar, Kowalewski, 2005. "The Financial System of the EU 25," MPRA Paper 652, University Library of Munich, Germany.
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Cited by:
  1. Lee, King Fuei, 2010. "Retail Minority Shareholders and Corporate Reputation as Determinant of Dividend Policy in Australia," MPRA Paper 23066, University Library of Munich, Germany.
  2. Darakhshan Younis & Attiya Yasmin Javid, 2014. "Market Imperfections and Dividend Policy Decisions of Manufacturing Sector of Pakistan," PIDE-Working Papers, Pakistan Institute of Development Economics 2014:99, Pakistan Institute of Development Economics.
  3. L. Ruzhanskaia & S. Luk'ianov, 2011. "Characteristics of the Dividend Policy of Russian Companies and the Interests of Investors," Problems of Economic Transition, M.E. Sharpe, Inc., vol. 54(2), pages 75-92, June.
  4. Dzidic, Ante, 2014. "Dividend Policy Of Public Companies In Bosnia And Herzegovina," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, University of Tourism and Management, Skopje, Macedonia, vol. 5(1), pages 1-10.
  5. L. Ruzhanskaya & S. Lukyanov., 2010. "Dividend Policy of Russian Companies and the Investors’ Interests," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 3.
  6. Zubaida Batool & Attiya Yasmin Javid, 2014. "Dividend Policy and Role of Corporate Governance in Manufacturing Sector of Pakistan," PIDE-Working Papers, Pakistan Institute of Development Economics 2014:109, Pakistan Institute of Development Economics.

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