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Do corporate governance mechanisms affect cash dividends? An empirical investigation of UK firms

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  • Basil Al-Najjar
  • Yacine Belghitar

Abstract

The study examines whether corporate governance mechanisms and the compliance with good governance practice are related to cash dividends. In particular, the study assesses the effect of institutional ownership and board structure on the decision to pay cash dividends. A study on UK firms is interesting because firms are expected to voluntarily structure governance mechanisms based on their own needs. We find that institutional owners positively affect cash dividend payments, suggesting that UK institutions are effective in forcing firms to disgorge cash. There is limited evidence that independent directors affect the cash dividends. The results also show that firm specifics affect the cash dividends, namely, business risk, firm size, and leverage ratio. The results are consistent across several robustness checks.

Suggested Citation

  • Basil Al-Najjar & Yacine Belghitar, 2014. "Do corporate governance mechanisms affect cash dividends? An empirical investigation of UK firms," International Review of Applied Economics, Taylor & Francis Journals, vol. 28(4), pages 524-538, July.
    • Handle: RePEc:taf:irapec:v:28:y:2014:i:4:p:524-538
    DOI: 10.1080/02692171.2014.884546
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    5. Samridhi Suman & Shveta Singh, 2022. "The Role of Multiple Large Shareholders in Dividend Payouts: Evidence from India," American Business Review, Pompea College of Business, University of New Haven, vol. 25(1), pages 120-151.

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