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Corporate Governance and Dividends Payout in India

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  • Jayesh Kumar

    (Xavier Institute of Management)

Abstract

This paper investigates the association between the corporate governance and the dividends payout policy for a panel of Indian corporate firms over the period 1994-2000. We explain the differences in the dividend payout behavior of the firms with the help of firm’s financial structure, investments opportunities, dividend history, earnings trend, and the ownership structure. We find a positive association of dividends with earnings and dividends trend. Debt equity ratio is found to be negatively associated, whereas past investment opportunities exert a positive impact on dividends. Ownership by the corporate and directors is positively related with dividends payout in level, and corporate ownership is negatively related in square. Institutional ownership has inverse effect on dividends in comparison to corporate ownership in levels as well as in its squares. We find no evidence in favor of association between foreign ownership and divided payout growth.

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File URL: http://128.118.178.162/eps/fin/papers/0409/0409007.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Finance with number 0409007.

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Length: 48 pages
Date of creation: 06 Sep 2004
Date of revision:
Handle: RePEc:wpa:wuwpfi:0409007

Note: Type of Document - pdf; pages: 48
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Web page: http://128.118.178.162

Related research

Keywords: Corporate Governance; Ownership Structure; Dividends Payout; and India;

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References

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  1. Michael J. Barclay & Clifford W. Smith & Ross L. Watts, 1995. "The Determinants Of Corporate Leverage And Dividend Policies," Journal of Applied Corporate Finance, Morgan Stanley, vol. 7(4), pages 4-19.
  2. Michael J. Brennan & Anjan V. Thakor, 2004. "Shareholder Preferences and Dividend Policy," Finance 0411017, EconWPA.
  3. Varouj Aivazian & Laurence Booth & Sean Cleary, 2003. "Do Emerging Market Firms Follow Different Dividend Policies From U.S. Firms?," Journal of Financial Research, Southern Finance Association & Southwestern Finance Association, vol. 26(3), pages 371-387.
  4. Gugler, Klaus & Yurtoglu, B. Burcin, 2003. "Corporate governance and dividend pay-out policy in Germany," European Economic Review, Elsevier, vol. 47(4), pages 731-758, August.
  5. Kalay, Avner, 1982. "Stockholder-bondholder conflict and dividend constraints," Journal of Financial Economics, Elsevier, vol. 10(2), pages 211-233, July.
  6. Demsetz, Harold & Villalonga, Belen, 2001. "Ownership structure and corporate performance," Journal of Corporate Finance, Elsevier, vol. 7(3), pages 209-233, September.
  7. Fenn, George W. & Liang, Nellie, 2001. "Corporate payout policy and managerial stock incentives," Journal of Financial Economics, Elsevier, vol. 60(1), pages 45-72, April.
  8. Larry H. P. Lang & Mara Faccio & Leslie Young, 2001. "Dividends and Expropriation," American Economic Review, American Economic Association, vol. 91(1), pages 54-78, March.
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Cited by:
  1. Akhtar, Muhammad Naeem & Hunjra, Ahmed Imran & Andleeb, Arifa & Butt, Babar Zaheer, 2011. "Individual investors perception of dividends: Pakistan’s percpective," MPRA Paper 40682, University Library of Munich, Germany.
  2. Ghosh, Saibal, 2010. "The dividend strategy of Indian companies: An empirical assessment," MPRA Paper 29567, University Library of Munich, Germany.
  3. Kurt Hess & Abeyratna Gunasekarage & Martin Hovey, 2010. "State-dominant and non-state-dominant ownership concentration and firm performance: Evidence from China," International Journal of Managerial Finance, Emerald Group Publishing, vol. 6(4), pages 264-289, September.

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