Corporate Governance and Dividend Policy: Evidence from Colombia

Abstract

We study the impact of the adoption of the corporate governance code denominated Country Code (CC), on the dividend payout ratio of non-financial firms that report to the Superintendency of Companies in Colombia. Using an unbalanced panel data model with a sample of 605 companies from 1997 until 2022, we find that companies that adopted voluntarily the Country Code of corporate governance have paid, on average, higher dividends than those that did not. In addition, the impact of the adoption of the Country Code is amplified by its quality, meaning that higher dividend payments are attached to better Corporate Governance quality. We did not find the impact of the two reforms to the Country Code in 2007 and 2014, which implies that these reforms didn’t help companies to distribute more dividends in Colombia.