Abstract
This study attempts to examine the role of managers in the associated agency theory on dividend policy decisions for firms that do not skip dividend payments. This research sample considered the firms that are listed on the Bombay Stock Exchange (BSE) and pay regular dividends on an annual basis from the financial year 2011 to 2020. Panel data econometric tools and robustness tests were carried out for model validation.The study results show that there is a higher positive relationship between change in payout ratio and managerial remuneration. Similarly, there is a large positive significance to increase manager incentive for regular payer firms with greater promoter control in higher dividend payout. Thus, this brings an agency theory perspective of rewarding well to managers to increase promoter wealth. Hence, policymakers can contemplate these findings to analyze the nexus between managers and promoters in the dividend policy of firms that never skip their dividend payments.
Highlights
The corporate dividend policy can be considered as a decision concerning the profit appropriation to shareholders
= POUTi,t − APOUTi,t−1,t−2,t−3, APOUTi,t −1,t − 2,t −3 a) firms must be listed and remain listed during where POUTi,t is the dividend payout of the firm the period of research; i for the current year t, APOUTi,t−1,t−2,t−3 is the average dividend payout of the firm i for three b) financial companies, banks, and insurance lagged periods, the first lagged year is t −1, the companies are excluded from the sample due second lagged year is t − 2, and the third lagged to their different business models and ac- year is t − 3, CDi,t is a proxy for propensity to counting policies; change the payout policy by regular payer firms
This study focuses on the factors affecting payout policy for firms maintaining a track record of dividend payments
Summary
The corporate dividend policy can be considered as a decision concerning the profit appropriation to shareholders. Agency problems pertain to conflict between the owner and managers whenever managers are inclined to identify their interests as distinct from shareholders (Agrawal & Knoeber, 1996; Dhanani, 2005). The preference for maintaining uninterrupted dividends by firms as the managerial decision has been discussed in findings of survey research done in India (Baker & Kapoor, 2014). Different researchers have scrutinized the dividend policy from an agency theory perspective
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