CORPORATE GOVERNANCE AND DIVIDEND PAYOUT POLICY: BEYOND COUNTRY-LEVEL GOVERNANCE

We address the mixed empirical findings on how corporate governance affects dividend payout policy by analyzing a large sample of firms from 30 countries. Our results indicate that firms with better firm-level governance pay more dividends, even after controlling for country-level governance. However, this relation is pronounced only in countries with low shareholder rights. In addition, we find that when the shareholder rights index is high, firm-level governance is unrelated to dividend payout in the full sample period. Finally, we show that in high-shareholder-rights countries, firm-level governance changes its role from before to after the 2008-2009 financial crisis.