•  
  •  
 
Business Review

Abstract

The purpose of this study is to empirically examine the effects of ownership and board structure on dividend smoothing for listed non-financial firms for the period 2005-2015 on the Pakistan Stock Exchange (PSX) in the light of agency and information asymmetry theory. Two measures, speed of adjustment and relative volatility are used to estimate dividend smoothing. Tobit regression is used for analyzing the effects of board structure on dividend smoothing measured via speed of adjustment while OLS is used for relative volatility. Additionally, the study applies the technique of principal component analysis (PCA) for board index. The results reveal that firms with large boards have a high level of dividend smoothing in Pakistan. They less frequently increase, cut, initiate and omit dividends. The substitution role of board independence is depicted by the negative association of board independence with dividend smoothing. Furthermore, independent audit committees and dividend smoothing are also found to be negatively associated

Keywords

Dividend smoothing · Corporate governance · Substitution · Pakistan

Creative Commons License

Creative Commons Attribution 4.0 License
This work is licensed under a Creative Commons Attribution 4.0 License.

Published Online

December 10, 2020

Included in

Finance Commons

Share

COinS
 
 

To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.