The role of corporate governance and ownership structure in the dividend smoothing behavior of Asian firms

The role of corporate governance and ownership structure in the dividend smoothing behavior of Asian firms

Shakeel Ahmed, Syed Zulfiqar Ali Shah, Arshad Ali Bhatti

International Islamic University

The study attempts to explore the determinants of dividend smoothing behavior of Asian firms during the period from 2009-2018. The study used firm’s specific characteristics, corporate governance and ownership structure variables as determinants of dividend smoothing in Asia due to their unique features from Western markets. Based on gender critical mass theory, the study finds the presence of gender critical mass is positive and significantly associated with firm dividend smoothing behavior; whereas, presence of fever women depicts negative or insignificant association with dividend smoothing behavior. In addition, study finds that firms with board interlock and larger in size don’t follow dividend smoothing. In contrast, the findings show that higher market to book value leads to firm’s dividend smoothing behavior. Importantly, the study also finds moderation role of gender diversity between family ownership and firm’s dividend smoothing behavior. Importantly, the study splits the sample into male and female CEO and findings show that the role of gender diversity is more pronounced in firms with male CEO. These results are consistent with the predictions of gender critical mass theory. Further, contrary to the agency theory based explanations of dividend smoothing, firms with family ownership smooth dividend more. These findings suggest that gender critical mass, family ownership and higher market to book value contribute positively in dividend smoothing behavior in Asian market.

Keywords: Dividend smoothing, corporate governance, ownership structure, fixed effects method, random effects method.

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How to cite this article:
Shakeel Ahmed, Syed Zulfiqar Ali Shah, Arshad Ali Bhatti. The role of corporate governance and ownership structure in the dividend smoothing behavior of Asian firms.International Journal of Economics, Sociology and Education, 2020,1:4

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