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

Basil Al-Najjar, Yacine Belghitar

Research output: Contribution to journalArticle

2 Citations (Scopus)

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
LanguageEnglish
Pages524-538
Number of pages15
JournalInternational Review of Applied Economics
Volume28
Issue number4
DOIs
Publication statusPublished - 18 Feb 2014
Externally publishedYes

Fingerprint

Empirical investigation
Cash dividends
Corporate governance mechanisms
Business risk
Owners
Leverage ratio
Governance mechanisms
Independent directors
Robustness
Firm size
Board structure
Institutional ownership
Cash
Ownership structure
Payment

Cite this

@article{2bb642b3e623473b99276ad9dc37721a,
title = "Do corporate governance mechanisms affect cash dividends? An empirical investigation of UK firms",
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",
keywords = "audit committee, audit meetings, independent auditors, Non-executive directors, Institutional ownership, cash dividends",
author = "Basil Al-Najjar and Yacine Belghitar",
year = "2014",
month = "2",
day = "18",
doi = "10.1080/02692171.2014.884546",
language = "English",
volume = "28",
pages = "524--538",
journal = "International Review of Applied Economics",
issn = "0269-2171",
publisher = "Routledge",
number = "4",

}

Do corporate governance mechanisms affect cash dividends? An empirical investigation of UK firms. / Al-Najjar, Basil; Belghitar, Yacine.

In: International Review of Applied Economics, Vol. 28, No. 4, 18.02.2014, p. 524-538.

Research output: Contribution to journalArticle

TY - JOUR

T1 - Do corporate governance mechanisms affect cash dividends? An empirical investigation of UK firms

AU - Al-Najjar, Basil

AU - Belghitar, Yacine

PY - 2014/2/18

Y1 - 2014/2/18

N2 - 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

AB - 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

KW - audit committee

KW - audit meetings

KW - independent auditors

KW - Non-executive directors

KW - Institutional ownership

KW - cash dividends

U2 - 10.1080/02692171.2014.884546

DO - 10.1080/02692171.2014.884546

M3 - Article

VL - 28

SP - 524

EP - 538

JO - International Review of Applied Economics

T2 - International Review of Applied Economics

JF - International Review of Applied Economics

SN - 0269-2171

IS - 4

ER -