Dividend Policy, Corporate Governance and the Managerial Entrenchment Hypothesis: An Empirical Analysis

Farinha, Jorge

doi:10.1111/j.0306-686x.2003.05624.x

Cited by 251 publications

(220 citation statements)

References 55 publications

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“…Some found family ownership and dividend payout to be positively related (Carney & Gedajlovic, 2002), while others found the relationship to be negative (Faccio, Lang, & Young, 2001;Farinha, 2003;Gugler, 2003;Setia-Atmaja, Tanewski, & Skully, 2009). Contrary to previous studies, we propose that family ownership influences dividend payouts in terms of different levels of cash flow rights of the controlling families, thereby creating a nonmonotonic relationship between those variables.…”

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confidence: 87%

Corporate governance in Taiwan: The nonmonotonic relationship between family ownership and dividend policy

2012

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This study considers an important aspect of corporate governance: the relationship between cash flow rights and dividend payout policy of listed family firms in Taiwan, an economy characterized by a predominance of family-controlled firms. Dividend payout levels are important because they are crucial to governing the firm and managing its investments. The empirical results show that at a low level of controlling families' cash flow rights, the threat to lose control at any time makes controlling families claim more in dividends. This yields a positive relationship between dividend payout and the cash flow rights of controlling families at this level. Meanwhile, at a moderate level of controlling families' cash flow rights, the entrenchment effect becomes more robust and creates a negative relationship with dividend payout. Finally, at the very highest level of controlling families' cash flow rights, excessive firm-specific risk again helps to again create a positive relationship. This nonmonotonic relationship between controlling family cash flow rights and dividend payout also holds for financially mature firms that have a high earned to contributed capital mix.

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confidence: 87%

Corporate governance in Taiwan: The nonmonotonic relationship between family ownership and dividend policy

2012

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“…Crutchley and Hansen in their paper of dividend payout policy (1989) reached to similar results and they find that this policy along with financial leverage is one of the most powerful mechanisms in management control and financial decisions. Farinha (2003) also shows similar evidence in his study of British firms; he examined dividend policy and insider ownership as controlling factors. He found that agency problem increases when the insider ownership goes beyond a specific level, also this requires more dividend payment to minimize the agency problems.…”

Section: Literature Reviewsupporting

confidence: 60%

Corporate Governance and Dividend Policy in Jordan

Al-Amarneh¹,

Yaseen²

2014

IJEF

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This study investigates the relationship between corporate governance and dividend policy in Jordan using a sample of 47 industrial company listed in Amman Stock Exchange (ASE) during the period 2005-2011. The results show that large firms with high investment opportunity set (growth) and high return on equity make large dividend payment, but firms with high financial leverage degree make lesser dividend payment. The random regression wasused to test the relationship between the corporate governance factors (corporate holdings, financial institution holdings, insiders holding and foreign holding) and dividend yield. The corporate holdings and financial institution holdings have a nonlinear relationship with dividend yields, as holdings increase the dividend yields increase up to a certain level of holdings supporting the free cash flow theory, as the insiders and foreign holdings increase the dividend yields decrease supporting the signaling theory.

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“…According to the corporate governance index provided by CLSA, Mitton (2004) found a remarkable positive correlation relationship between a company's governance structure and the cash dividend payment. After that, Farinha (2003), by using the data of the UK capital market and American capital market successively in 2003 and 2004, obtained a similar research conclusion. Contrary to that, the other view believing a negative correlation relationship between a company's governance mechanism and the cash dividend policy.…”

Section: Internal Control and Cash Dividend Policysupporting

confidence: 53%

The Application of Empirical Study in Accounting Education: An Example of Internal Control and Cash Dividend

Ruan

2017

EURASIA J MATH SCI T

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As an important development trend for accounting higher education, accounting empirical teaching plays a fundamental role in enriching and improving researching methods in accounting fields. This paper starts from the relationship between internal control and cash dividend policy, combines with author's accounting teaching experience for years, follows the general research ideas of questions raising, questions analysis, questions solving, and from the aspects of theoretical analysis, literature review, research hypothesis, research methods, empirical process and results discussion to make a detail description on accounting empirical teaching methods and process. The results show that there is a significant positive correlation between internal control and cash dividend policy, and this kind of correlation shows different influence intensity according to the difference of company nature. Through the research of this paper, it can make the relevant educator further clarify the process and methods of the accounting classroom empirical teaching, which is of great significance to popularize and enhance the application of accounting empirical research methods in accounting field.

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Dividend Policy, Corporate Governance and the Managerial Entrenchment Hypothesis: An Empirical Analysis

Cited by 251 publications

References 55 publications

Corporate governance in Taiwan: The nonmonotonic relationship between family ownership and dividend policy

Corporate governance in Taiwan: The nonmonotonic relationship between family ownership and dividend policy

Corporate Governance and Dividend Policy in Jordan

The Application of Empirical Study in Accounting Education: An Example of Internal Control and Cash Dividend

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