Corporate Governance and Dividend Payout Policy: Evidence from Borsa Istanbul

Abstract

Corporate governance quality aims to ensure the efficiency and productivity of business operations, the reliability of reporting, and the protection of stakeholders' rights and interests. This study investigates whether the quality of corporate governance has any effect on the dividend policies of enterprises. For this purpose, the sample of the research consists of 70 companies that have a corporate governance rating and operate in Borsa Istanbul. The panel data analysis method is applied to determine the relationship between corporate governance rating and dividend policies of the enterprises. The empirical results show that corporate governance rating has a statistically significant and positive effect on the dividend policies of enterprises. Accordingly, it is understood that enterprises with better governance quality tend to pay stronger dividends. The analysis of the sub-components of corporate governance reveals that only the board of directors score has a positive effect on dividend policy. According to other empirical findings, size and profitability variables have a statistically significant and positive effect on dividend policy, while asset growth and leverage variables have a statistically significant and negative effect on dividend policy. At the same time, it is among the other empirical findings that enterprises tend to reduce dividend distributions during the COVID-19 period.