Payout policy, agency conflicts, and corporate governance
نویسندگان
چکیده
We examine the effect of corporate governance on the use of dividends and repurchases, composition of payout, and inclusion of a pre-commitment feature in the payout policy. We find that dividend payout is decreasing in governance quality. Corporate governance has a mixed effect on repurchases: good external governance prompts managers to repurchase more and to use repurchases as the only form of payout, but good internal governance lowers the need for repurchases. High agency costs due to weak corporate governance increase the likelihood of having cash distributions and decrease the reliance on discretionary payouts. The use of dividend pre-commitment in the payout policy serves as a substitute for strong corporate governance. JEL classification: G30, G34, G35
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