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Corporate Governance and Dividends Payout in India

Author

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  • Jayesh Kumar

    (Jayesh Kumar is Economist at Watson Wyatt Worldwide. Jayesh.Kumar@watsonwyatt.com)

Abstract

This article investigates the association between 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 behaviour of the firms with the help of firms' financial structure, investment opportunities, dividend history, earnings trend and the ownership structure. We find a positive association of dividends with earnings and dividends trends. Debt-equity ratio is found to be negatively associated, whereas, past investment opportunities exert a positive impact on the 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 favour of an association between foreign ownership and dividend payout growth.

Suggested Citation

  • Jayesh Kumar, 2006. "Corporate Governance and Dividends Payout in India," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 5(1), pages 15-58, April.
    • Handle: RePEc:sae:emffin:v:5:y:2006:i:1:p:15-58
    DOI: 10.1177/097265270500500102
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    References listed on IDEAS

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    Cited by:

    1. Gibson Hosea Munisi & Roy Mersland, 2016. "Ownership, Board Compensation and Company Performance in Sub-Saharan African Countries," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 15(2), pages 191-224, August.
    2. Nabaraj Adhikari, Ph.D., 2015. "Determinants of Corporate Dividend Payout in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 27(2), pages 1-22, October.
    3. Collins G. Ntim & Kwaku K. Opong & Jo Danbolt, 2015. "Board size, corporate regulations and firm valuation in an emerging market: a simultaneous equation approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 29(2), pages 194-220, March.

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    More about this item

    Keywords

    JEL Classification: G32; JEL Classification: G35; Corporate governance; ownership structure; dividends payout; India;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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