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DIVIDEND POLICY AND CORPORATE GOVERNANCE: A RESEARCH NOTE

Frank S. Smith, Victor A. Puleo, Jr., K. Michael Casey

DOI: 10.22495/cocv5i3c1p6

Abstract

This paper explores the relationship between a firm’s dividend payment and an external perception of whether the firm exercises good corporate governance. Consistent with an agency explanation of dividend payout, we find that firms with higher corporate governance scores do pay lower dividends. The reduced cost associated with not seeking external funds as often as firms with higher dividends can be listed as a benefit for firms seeking to be known as better corporate citizens.

Keywords: Dividend Policy, Corporate Governance, External Funds

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