Corporate Governance, Dividend Policy, Accrual Quality and Corporate Value

• Main Authors: Li-Ting Wang, 王麗亭
• Other Authors: Jia-Xun Jiang
• Format: Others
• Language: zh-TW
• Published: 2006
• Online Access: http://ndltd.ncl.edu.tw/handle/58524647062609744550

碩士 === 輔仁大學 === 會計學系碩士班 === 94 === The thesis examines the relationship among corporate governance structure, cash dividend policy, accrual quality and firm value. The sample consists of observations selected from listed and over-the-counter companies in Taiwan from 1998 to 2004. The empirical results are summarized as follows. 1.As the cash flow rights held by the controlling shareholder increases, both the likelihood of cash dividends payment and the level of cash dividends will get higher. Moreover, the accrual quality will get better. The finding shows that when the ownership of the controlling shareholder gets higher, the incentive effect will dominant, and thus the interest of the controlling shareholder will be more congruent with minor shareholders, in turn it helps for improving the accrual quality of financial statements. 2.If the proportion of seats of the board of directors controlled by the controlling shareholder increases, then the likelihood of cash dividends payment and the level of cash dividends are lower. Further, the accrual quality will get worse. The finding shows that when the board of directors is high affiliated with the controlling shareholder, the entrenchment effect will dominant, and thus the controlling shareholder will exploit minor shareholders’ interests and impair the accrual quality of financial statements. 3.The predicted excess cash dividends arising from corporate governance structure incrementally decrease the cost of equity capital after controlling other variables. In addition, the effect of cash dividends on the firms with worse accrual quality will get stronger. Besides, the predicted excess accrual quality arising from corporate governance structure is negatively correlated with cost of debt. Furthermore, for the firms paying no cash dividends, the predicted excess accrual quality arising from corporate governance structure incrementally decreases the cost of equity capital. 4.For firms with excess cash dividends or accrual quality arising from corporate governance structure, they will have better performance in the future. The finding shows that as firms with better corporate governance mechanisms (they are proxy by the cash flow rights held by the controlling shareholder is higher or the board of directors is not high affiliated with the controlling shareholder) signal positive future operating performance. Overall, our evidences support the views that better corporate governance structure can strengthen cash dividend policy and improve accrual quality, and the predicted excess cash dividends or accrual quality arising from corporate governance structure can be the monitoring role in mitigating the agency problems effectively and thus reduce the cost of capital. In addition, cash dividends and accrual quality are effective signal about future performance of firms. They can be regarded as tools to communicate with stakeholders, and further, to mitigate asymmetric information and agency conflicts.