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Analysis Of The Relationship Between Disclosure Quality And Dividend Payouts From The Agency Theory Perspective

Author

Listed:
  • LIN, Dan

    (Takming University of Science and Technology, Taiwan)

  • KUO, Hsien-Chang

    (Shih Chien University, Taiwan)

  • WANG, Lie-Huey

    (Ming Chuan University, Taiwan)

Abstract

This study examines the effect of disclosure quality on dividend policy when the level of agency problem is taken into account and empirically tests the outcome and substitution hypotheses.We find evidence consistent with the outcome hypothesis; that is, disclosure quality is positively related to dividend payouts. In addition, high agency cost firms with better disclosure quality are associated with a stronger propensity to pay dividends and larger payouts. The results highlight the important governance role of disclosure quality. This study shows that despite the high agency cost problem, so long as there is high disclosure quality, shareholders can safeguard their interests by demanding higher dividends payouts.

Suggested Citation

  • LIN, Dan & KUO, Hsien-Chang & WANG, Lie-Huey, 2016. "Analysis Of The Relationship Between Disclosure Quality And Dividend Payouts From The Agency Theory Perspective," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 20(1), pages 6-20.
    • Handle: RePEc:vls:finstu:v:20:y:2016:i:1:p:6-20
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    References listed on IDEAS

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    More about this item

    Keywords

    dividend policy; disclosure quality; agency theory; corporate governance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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