International Transaction Journal of Engineering,
Management, & Applied Sciences & Technologies


:: International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies

ISSN 2228-9860
eISSN 1906-9642


Vol.11(13) (2020)

  • Roles of Corporate Governance and Ownership Structure in Dividend Smoothing Behavior of Asian Firms

    Shakeel Ahmed, Zulfiqar Ali Shah (Department of Management Sciences, International Islamic University, PAKISTAN),
    Arshad Ali Bhatti ( School of Economics, IIIE, International Islamic University, Islamabad, PAKISTAN).

    Disciplinary: Business and Financial Management.

    ➤ FullText

    DOI: 10.14456/ITJEMAST.2020.266

    Keywords: Dividend smoothing; Corporate governance; Ownership structure; Fixed effects method; Random effects method; Family-owned business; Board gender diversity; Board independence.

    The study explores the determinants of dividend smoothing behavior of Asian firms for 2009-2018. The study used a firm's specific characteristics, corporate governance, and ownership structure variables as determinants of dividend smoothing in some Asian markets (Pakistan, India, Sri Lanka, Malaysia, and Singapore). 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, the presence of fewer women depicts a negative or insignificant association with dividend smoothing behavior. The moderating role of gender diversity between family ownership and dividend smoothing is also examined. Further, contrary to the agency theory-based explanations of dividend smoothing, we find that family firms follow a smooth dividend policy. These findings suggest that gender-critical mass, family ownership, and higher market to book value contribute positively to dividend smoothing behavior in the Asian market.

    Paper ID: 11A13T

    Cite this article:

    Ahmed, S., Shah, Z.A., Bhatti, A.A. (2020). Roles of Corporate Governance and Ownership Structure in Dividend Smoothing Behavior of Asian Firms. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies, 11(13), 11A13T, 1-12.


    Amihud, Y., & Murgia, M. (1997). Dividends, taxes, and signaling: evidence from Germany. The Journal of Finance, 52(1), 397-408.

    Ararat, M., Aksu, M., & Tansel Cetin, A. (2015). How board diversity affects firm performance in emerging markets: Evidence on channels in controlled firms. Corporate Governance: An International Review, 23(2), 83-103.

    Armstrong, C.S., Core, J.E., & Guay, W.R. (2014). Do independent directors cause improvements in firm transparency? Journal of Financial Economics, 113(3), 383-403.

    Baltagi, B. H., Bratberg, E., & Holm?s, T. H. (2005). A panel data study of physicians' labor supply: the case of Norway. Health Economics, 14(10), 1035-1045.

    Batool, Z., & Javid, A. Y. (2014). Dividend policy and the role of corporate governance in the manufacturing sector of Pakistan. Pakistan Institute of Development Economics, 109.

    Black, F., & Scholes, M. (1974). The effects of dividend yield and dividend policy on common stock prices and returns. Journal of financial economics, 1(1), 1-22.

    Brav, A., Graham, J. R., Harvey, C. R., & Michaely, R. (2005). Payout policy in the 21st century. Journal of financial economics, 77(3), 483-527.

    De Cesari, A. (2012). Expropriation of minority shareholders and payout policy. The British Accounting Review, 44(4), 207-220.

    Easterbrook, F. H. (1984). Two agency-cost explanations of dividends. The American economic review, 74(4), 650-659.

    Edmans, A. (2014). Blockholders and corporate governance. Annu. Rev. Financ. Econ., 6(1), 23-50.

    Fama, E.F., & Babiak, H. (1968). Dividend policy: An empirical analysis. Journal of the American Statistical Association, 63(324), 1132-1161.

    Fama, E.F., & French, K.R. (1992). The cross?section of expected stock returns. Journal of Finance, 47(2), 427-465.

    Franks, J.R., Mayer, C.P., & Renneboog, L.D.R. (1997). Capital structure, ownership and board restructuring in poorly performing companies. Katholieke Universiteit Leuven, Departement Toegepaste Economische Wetenschappen.

    Godard, L., & Schatt, A. (2005). Characteristics and functioning of French boards of directors. French management review, 1(5), 69-87.

    Gugler, K., & Yurtoglu, B.B. (2003). Corporate governance and dividend pay-out policy in Germany. European economic review, 47(4), 731-758.

    Hausman, J. A. (1978). Specification tests in econometrics. Econometrica: Journal of the econometric society, 1251-1271.

    Hussainey, K., Mgbame, C.O., & Chijoke-Mgbame, A.M. (2011). Dividend policy and share price volatility: UK evidence. The Journal of risk finance.

    Javakhadze, D., Ferris, S. P., & Sen, N. (2014). An international analysis of dividend smoothing. Journal of Corporate Finance, 29, 200-220.

    Jensen, M. C., & Meckling, W. (1976). H. (1976). Theory of the firm: managerial behavior, agency costs and ownership structure. Journal of Finance Economics, 3.

    Mirza, N. I., & Malik, Q. A. (2019). Effects of Corporate Governance on Dividend Decisions with a Focus on Moderating Role of Board Diversity. International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies, 10(17), 10A17I, 1-17. DOI: 10.14456/ITJEMAST.2019.235

    Kraiczy, N. (2013). Research on family firms-Definition, theories, and performance. In Innovations in Small and Medium-Sized Family Firms, 7-34. Springer Gabler, Wiesbaden.

    La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R. (2000). Investor protection and corporate governance. Journal of Financial Economics, 58(1-2), 3-27.

    Leary, M. T., & Michaely, R. (2011). Determinants of dividend smoothing: Empirical evidence. The Review of Financial Studies, 24(10), 3197-3249.

    Lintner, J. (1956). Distribution of incomes of corporations among dividends retained earnings and taxes. American Economic Review, 46(2), 97-113.

    Masset, P., Uzelac, I., & Weisskopf, J.P. (2019). Family ownership, asset levels, and firm performance in Western European hospitality companies. Journal of Hospitality & Tourism Research, 43(6), 867-889.

    Maury, C.B., & Pajuste, A. (2002). Controlling shareholders, agency problems, and dividend policy in Finland. LTA, 1(2), 15-45.

    Mehboob, F., Tahir, S.H., & Hussain, T. (2015). Impact of family ownership on financial decisions of a firm: an analysis of pharmaceutical and chemical sectors in Pakistan. Euro-Asian Journal of Economics and Finance, 3(2), 103-112.

    Miller, M.H., & Modigliani, F. (1961). Dividend policy, growth, and the valuation of shares. Journal of Business, 34(4), 411-433.

    Miller, M.H., & Rock, K. (1985). Dividend policy under asymmetric information. Journal of Finance, 40(4), 1031-1051.

    Moh'd, M.A., Perry, L.G., & Rimbey, J.N. (1995). An investigation of the dynamic relationship between agency theory and dividend policy. Financial Review, 30(2), 367-385.

    Rozeff, M.S. (1982). Growth, beta and agency costs as determinants of dividend payout ratios. Journal of Financial Research, 5(3), 249-259.

    Thanatawee, Y. (2013). Ownership structure and dividend policy: Evidence from Thailand. International Journal of Economics and Finance, 5(1), 121-132.

    Wardhana, L., Tandelilin, E., Lantara, I., & Junarsin, E. (2014). Dividend policy in Indonesia: a life-cycle explanation. Asian Finance Association Conference.

    Woolridge, J. R. (1983). Stock dividends as signals. Journal of Financial Research, 6(1), 1-12.

    Yarram, S.R., & Dollery, B. (2015). Corporate governance and financial policies. Managerial Finance, 41(33), 267-285.

Other issues:


Call-for-Scientific Papers
Call-for-Research Papers:
ITJEMAST invites you to submit high quality papers for full peer-review and possible publication in areas pertaining engineering, science, management and technology, especially interdisciplinary/cross-disciplinary/multidisciplinary subjects.

To publish your work in the next available issue, your manuscripts together with copyright transfer document signed by all authors can be submitted via email to Editor @ (no space between). (please see all detail from Instructions for Authors)

Publication and peer-reviewed process:
After the peer-review process (4-10 weeks), articles will be on-line published in the available next issue. However, the International Transaction Journal of Engineering, Management, & Applied Sciences & Technologies cannot guarantee the exact publication time as the process may take longer time, subject to peer-review approval and adjustment of the submitted articles.