Insurance company dividend policy decisions: Evidence on the role of corporate governance and regulation

摘要

Purpose - The purpose of this paper is to explore the relationship between good corporaterngovernance and dividend payment in the regulated insurance industry.rnDesign/methodology/approach - A modification of Rozeff's transaction cost/agency cost trade-offrnmodel was estimated on a sample of 55 firms in the insurance industry. Data cover a five-year periodrnending in 2006.rnFindings - Consistent with an agency view of dividends functioning to reduce the need for firmrnmonitoring, it was found that there is no relationship between good corporate governance andrndividend policy in a regulated industry. In other words, regulation appears to supplant the needrnfor most corporate governance mechanisms and dividend distribution to provide information.rnResearch limitations/implications - One data point used in this study, the corporaterngovernance quotient (CGQ), is a relatively new metric created in 2001. Therefore limited use ofrnthis variable has appeared in previous research. Additional work is needed to fully evaluate therneffectiveness of CGQ as a true measure of corporate governance.rnPractical implications - Regulated firms in the insurance industry do not need to be subjectedrnto the external monitoring forced by high dividend payments. Regulators perform that functionrninstead.rnOriginality/value - This study is the first to evaluate the impact of good corporate governancernon regulated firms' dividend policy.