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

Basil Al-Najjar, Yacine Belghitar

Research output: Contribution to journalArticle

3 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
Original languageEnglish
Pages (from-to)524-538
Number of pages15
JournalInternational Review of Applied Economics
Volume28
Issue number4
DOIs
Publication statusPublished - 18 Feb 2014
Externally publishedYes

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