Document Type

Article

Disciplines

Business | Business Administration, Management, and Operations | Corporate Finance | Finance and Financial Management

Comments

Published in International Research Journal of Finance and Economics, Issue 97 (Sept 2012). 60-71.

Abstract

The decision to pay dividends is influenced by many financial factors. The purpose of this study is to find the relationships between corporate governance, institutional ownership, and the decision to pay dividends in American service firms. A sample of 296 American firms listed on New York Stock Exchange (NYSE) for a period of 3 years (from 2009-2011) was selected. This study applied a co-relational and non-experimental research design. The findings of this study indicate that the decision to pay dividends is a positive function of board size, CEO duality, and internationalization of the firm, and a negative function of institutional ownership. The results show that when i) firm size is held constant, the decision to pay an amount of dividends is a positive function of CEO duality, board size, and internationalization, and a negative function of institutional ownership, ii) firm performance is held constant, the decision to pay dividends is a positive function of CEO duality, and a negative function of institutional ownership, iii) financial leverage is held constant, the decision to pay dividends is a positive function of CEO duality, board size, and internationalization, and a negative function of institutional ownership, and iv) firm growth is held constant, the decision to pay dividends is a negative function of institutional ownership.This study contributes to the literature on the factors that influence the decision to pay an amount of dividends. The findings may be useful for stock market investors, stakeholders, financial managers, and financial management consultants.

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