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The Influence of Corporate Governance Quality and Growth Opportunities on Firms’ Payout Policy
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Business Studies.
2019 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 HE creditsStudent thesis
Abstract [en]

This paper examines the effect of corporate governance quality on firms’ payout policy. We analyze a global sample of 3,904 firms (25,773 firm-year observations) over the period 2002-2016. I find that corporate governance quality is positively related to payout ratios, consistent with the perspective of the free cash flow hypothesis (Jensen, 1986) and the outcome dividend model (LLSV, 2000). Moreover, consistent with findings of Mitton (2004) the positive relationship between firm’s corporate governance and dividend payout mainly holds for countries with strong shareholder or creditor protection, suggesting that firm-level corporate governance and country-level protection rights are complements rather than substitutes. This study also shows that firms with high corporate governance quality are less likely to disburse cash to their shareholders when controlling for country-level shareholder rights. Furthermore, this study contributes to the existing literature by investigating share repurchases and finds that well governed firms distribute less cash through share repurchases and total payout when they experience high growth opportunities. Moreover, the results suggest that countries that experience stronger shareholder and creditor rights reduce the positive impact that corporate governance quality has on share repurchases and total payout.

Place, publisher, year, edition, pages
2019. , p. 60
Keywords [en]
Corporate Governance, Payout Policy, Dividend, Share Repurchases, Protection Rights.
National Category
Business Administration
Identifiers
URN: urn:nbn:se:uu:diva-377179OAI: oai:DiVA.org:uu-377179DiVA, id: diva2:1289110
Educational program
Master Programme in Business and Management
Available from: 2019-02-15 Created: 2019-02-15 Last updated: 2019-02-15Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
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  • Other locale
More languages
Output format
  • html
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