Corporate Governance Mechanisms and Firms' Dividend Payout Policies: Evidence from Bahrain

Abstract

This study aims to examine the impact of corporate governance (CG) mechanisms on the dividend payout policies of Bahraini listed companies. By using multivariate regression model, the results of this study show a significant relationship between the firms' dividend payout ratio and five CG mechanisms (i e. board of directors' meetings, the board of directors' size, number of board of directors' committees, audit committee's meetings and number of independent audit committee members). On the other hand, the relationship between the firm's dividend payout ratio and the remaining two CG mechanisms (i e. audit committee size and independent audit committee chairmen) have been found to be insignificant. The findings of the study will help the shareholders, lenders, and policymakers in Bahrain to develop sound dividend payout policies that will contribute to the increase of the investors' returns, protect the lenders' interest and reduce the agency cost. Also, the study will contribute to the ongoing debate on the impact of CG mechanisms on the firm's dividend payout policies in Bahrain by analyzing the data from the country's stock market.