Does Corporate Governance Affect the Critical Corporate Policies Such as Dividend Policy?

Abstract

This study examines the influence of corporate governance on dividend policy based on a sample of Canadian firms listed on the S&P/TSX composite index during 2009-2012. The results show that firms with better governance quality, measured by the governance index provided by The Globe and Mail, have larger payouts and have a higher propensity to pay dividends. In terms of four dimensions of corporate governance index, the shareholding and compensation index is the most important determinant of dividend payouts. Our results support the complementary role of corporate governance and dividend policy of the firms. The implication from this study is that managers and board of directors should make dividend payout decisions in a big picture of corporate governance.

Determinants of voluntary CSR reporting reliability – evidence from Canada

“…Similarly to Bozec and Dia (2012), Berthelot et al (2010) and Lin and Lu (2020), this study uses The Globe and Mail ’s Corporate Board Games to measure CG practices. The 2018 version from the Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto analyses the CG practices of 224 corporations listed on the on the Toronto Stock Exchange S&P/TSX composite index (Globe and Mail Inc., 2017).…”