The Impact of Corporate Governance on the Relationship between Investment Opportunities and Dividend Policy: An Endogenous Switching Model Approach

다국어 초록 (Multilingual Abstract)

This study investigates the role of corporate governance in the relationship between investment opportunities and dividend payouts. The study sample is divided into strong and weak governance regimes to investigate outcome and substitute effects, where the former stresses the negative relationship between investment opportunity and dividend payouts in a strong governance regime while the latter emphasizes the positive relationship between the two in a weak governance regime. Using the endogenous switching model on a sample of Taiwan publicly listed firms from 2000 to 2009, this study concludes that the substitute model hypothesis is supported using different governance variables, but no outcome effect is identified.

참고문헌 (Reference)

1 Himmelberg, C., "Understanding the determinants of managerial ownership and the link between ownership structure and performance" 53 : 353-384, 1999

2 Hansen, B., "Threshold effects in non-dynamic panels: Estimation, testing, and inference" 93 : 345-368, 1999

3 Tong, H., "Threshold autoregression, limit cycles and cyclical data" 42 : 245-292, 1980

4 Graham, J., "The theory and practice of corporate finance: Evidence from the field" 60 : 187-243, 2001

5 Claessens, S., "The separation of ownership and control in East Asian corporations" 58 : 81-112, 2000

6 Farinha, J., "The relation between dividends and insider ownership in different legal systems: International evidence" 15 : 169-189, 2009

7 Smith, C., "The investment opportunity set and corporate financing, dividend, and compensation policies" 32 : 263-292, 1992

8 Fluck, Z., "The dynamics of the management–shareholder conflict" 12 : 379-404, 1999

9 Barclay, M., "The determinants of corporate leverage and dividend policies" 7 : 4-19, 1995

10 Goldfeld, M., "Techniques for estimating switching regressions, In Studies in Non-Linear Estimation" Ballinger 3-36, 1976

11 Pattenden, K., "Taxes and dividend policy under alternative tax regimes" 14 : 1-16, 2008

12 Maddala, G. S., "Switching regression models with exogenous and endogenous switching" American Statistical Association December 423-426, 1975

13 Jiraporn, P., "Staggered boards, managerial entrenchment, and dividend policy" 36 : 1-19, 2009

14 Jensen, G., "Simultaneous determination of insider ownership, debt and dividend policies" 27 : 247-263, 1992

15 Fama, F., "Separation of ownership and control" 26 : 301-325, 1983

16 Black, B., "Predicting firms’ corporate governance choices: Evidence from Korea" 12 : 660-691, 2006

17 Brav, A., "Payout policy in the 21st century" 77 : 483-527, 2005

18 Chen, Z., "Ownership concentration, firm performance, and dividend policy in Hong Kong" 13 : 431-449, 2005

19 Hu, A., "Managerial entrenchment and payout policy" 39 : 759-790, 2004

20 La Porta, R., "Law and finance" 106 : 1113-1155, 1998

21 Eisenberg, T., "Larger board size and decreasing firm value in small firms" 48 : 35-54, 1998

22 Gibson, M., "Is corporate governance ineffective in emerging markets?" 38 : 231-250, 2003

23 Hu, X., "Investment and capital market imperfections: A switching regression approach using US firm panel data" 80 : 466-479, 1998

24 Denis, D., "International corporate governance" 38 : 1-36, 2003

25 Rozeff, M., "Growth debt and agency costs as determinants of dividend payout ratios" 5 : 249-259, 1982

26 Gillan, S., "Explaining corporate governance: Boards, bylaws and charter provisions" Arizona State University 2003

27 Zabel, J., "Estimating fixed and random effects models with selectivity" 40 : 269-272, 1992

28 Bekaert, G., "Emerging markets finance" 10 : 3-55, 2003

29 Borokhovich, K., "Dividends, corporate monitors and agency costs" 40 : 37-65, 2005

30 DeAngelo, H., "Dividends and losses" 47 : 1837-1863, 1992

31 Keim, D., "Dividend yields and stock returns: Implications of abnormal January returns" 14 : 473-489, 1985

32 Michaely, R., "Dividend smoothing, agency costs, and information asymmetry: Lessons from the dividend policies of private firms" Cornell University 2006

33 Jiraporn, P., "Dividend policy, shareholder rights, and corporate governance" 16 : 24-36, 2006

34 Farinha, J., "Dividend policy, corporate governance and the managerial entrenchment hypothesis: An empirical analysis" 30 : 1173-1209, 2003

35 DeAngelo, H., "Dividend policy and the earned ⁄ contributed capital mix: A test of the life-cycle theory" 81 : 227-254, 2006

36 Allen, F., "Dividend policy" 9 : 793-837, 1995

37 Ooi, J., "Dividend payout characteristics of UK property companies" 7 : 133-143, 2001

38 Fama, F., "Disappearing dividends: Changing firm characteristics or lower propensity to pay" 60 : 3-43, 2001

39 Fidrmuc, J., "Culture, agency costs, and dividends" 38 : 331-339, 2010

40 Fan, P., "Corporate ownership structure and the informativeness of accounting earnings in East Asia" 33 : 401-425, 2002

41 Cyert, R., "Corporate governance, takeovers, and top-management compensation: Theory and evidence" 48 : 453-469, 2002

42 Bai, C.-E., "Corporate governance and market valuation in China" 32 : 599-616, 2004

43 Lee, T., "Corporate governance and financial distress: Evidence from Taiwan" 12 : 378-388, 2004

44 Gompers, P., "Corporate governance and equity prices" 118 : 107-155, 2003

45 Mitton, T., "Corporate governance and dividend policy in emerging markets" 5 : 409-426, 2004

46 Gugler, K., "Corporate governance and dividend pay-out policy in Germany" 47 : 731-758, 2003

47 Dhanani, A., "Corporate dividend policy: The views of British financial managers" 32 : 1625-1672, 2005

48 DeAngelo, H., "Capital structure, payout policy, and financial flexibility" Marshall School of Business, University of Southern California 2007

49 Dickens, R., "Bank dividend policy: Explanatory factors" 41 : 3-13, 2003

50 Ferris, S., "An international analysis of dividend payment behavior" 36 : 496-522, 2009

51 La Porta, R., "Agency problems and dividend policies around the world" 55 : 1-33, 2000

52 Jensen, M., "Agency costs of free cash flow, corporate finance, and takeovers" 76 : 323-329, 1986

53 Crutchley, C., "A test of the agency theory of managerial ownership, corporate leverage and corporate dividends" 18 : 36-46, 1989

54 Casey, K., "A note on determinants of cash flow dividend payout in the petroleum industry" 32 : 239-248, 1997