Investigating The Relationship Between corporate Governance and The firm's Dividend Policy: an Empirical Study

Abstract

The study seeks to investigate the relationship between corporate governance and the firm`s dividend policy of Egyptian listed firms during the period 2007 to 2010. In existing literature, the relationship between corporate governance and dividend policy is inconclusive. Hence, this study is aiming to provide some empirical evidence by investigating the role of corporate governance mechanisms in determining the firm`s dividend policy. The researcher selected ten independent variables, which are board size, board composition, CEO duality, managerial ownership and the ranking of listed firms in ESG index as a proxy for corporate governance mechanisms, and firm`s performance, size, growth, debt level and industry type as control variables, to test their effect on dependent variable, which is dividend payout decision. Descriptive analysis, Spearman`s coefficient of correlation analysis and binary logistic regression analysis were performed on a sample that includes all firms listed on Egyptian governance index, S&P/EGX ESG index, except banks and financial firms due to the difference in the nature of financial statements, profitability measures and liquidity assessment.