Evaluating the Impact of Corporate Governance Dimensions (Control and Financial Information Transparency) on Corporate Dividend Policy

Subject Areas :

Yahya Hassas Yeganeh ¹ (استادیار دانشگاه علامه طباطبایی)
Asghar Pakmaram ² (دکتری حسابداری از دانشگاه ازاد اسلامی واحد علوم و تحقیقات)

Received: 2015-05-09 Accepted : 2015-05-09 Published : 2012-11-21

Keywords: Corporate governance, Agency Cost, Dividend Policy, Substitution Hypothesis, Outcome HypothesiS,

Abstract :

Motivated by agency theory, we investigate how corporate governance affects firm’s dividend policy. It is argued that dividend payouts reduce agency conflicts by the reduction of free cash flow’s amount. Therefore, the investigation of corporate governance impact on dividend policy can viewed as an instrument for solving agency costs problems. This study confirmed this issue, also. Eighty-one Tehran stock exchange listed companies between 2006 and 2010 have been ed as the sample of the research. Furthermore, Control, and financial information transparency dimensions of corporate governance calculated according to its measurable indexes such as Audit reference (Audit Quality), the firm under examination is parent or subsidiary, Legal inspector of the firm and Financial Information Transparency. The Findings indicated that Audit Quality as a control dimension and Financial Information Transparency have a significant and direct (positive) effect on corporate dividend policy. In addition, significant effect of control variables as cash dividends of the previous year, stock dividend, investment opportunity (MTB), free cash flow, profitability, leverage and firm size on corporate dividend policy was confirmed.

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