دانلود رایگان مقاله انگلیسی اثر واسطه گر پرداخت سود سهام بر رابطه بین حکومت داخلی و جریان نقدی آزاد - امرالد 2018

Abstract

Purpose – This paper aims to examine the mediating effect of dividend payout on the relationship between internal governance mechanisms (board of directors and ownership structure) and the free cash flow level. Design/methodology/approach – Linear regression models are used to investigate such relationships applying data from a sample of 207 non-financial firms listed on the Gulf Cooperation Council countries’ stock markets between 2009 and 2016. To test the significance of mediating effect, the author uses the Sobel test. Findings – The author finds a partial mediation effect of dividend on the relationship between both board independence and managerial ownership and the level of free cash flow. The results confirm the major role of outside directors in corporate governance. This governance mechanism contributes to the protection of shareholders’ interests through a generous dividend policy. However, the author finds that large managerial shareholdings increase the level of free cash flow through lower dividend payouts. This result suggests that powerful managers follow their preference of retaining excess cash to their own interests. Practical implications – This paper offers insights to policy-makers of emerging economies interested in the development of the corporate governance. This study provides guidance for firms in the construction and implementation of their own corporate governance policies. Originality/value – The main contribution of the present paper is to examine the dividend payout as a potential mediating variable between internal governance mechanisms and free cash flow. Moreover, it highlights the issue of efficient management of substantial funds in Sharia-compliant and non-Shariacompliant firms.

5. Conclusions and implications

Firms generating a significant amount of discretionary funds, which exceed the need for positive NPV investments, are faced with the issue of efficient management of these resources. Jensen (1986) argues that self-interested managers are inclined to spend excess cash on unnecessary expenses and unprofitable investments, because even negative NPV projects can increase their personal utility. In the same vein, Ang et al. (2000) and Chung et al. (2005) document that managers tend to use FCF at their own discretion. Besides, the FCF problem severity seems to be dependent on compliance with Sharia. In fact, among the key characteristics of Sharia compliance is to have low leverage, low amount of account receivable and low ratio of cash and interest bearing.

To mitigate this managers’ practice, scholars emphasize on the major role of dividend and internal governance mechanisms in reducing excess cash. The payment of high dividends subjects managers under financial market discipline. By making internal funds insufficient to cover investment needs, managers are forced to access the external capital markets to finance new projects. Thus, dividend puts the management under inspection by security exchange, investment banks and capital suppliers. With regard to internal governance mechanisms, we consider tow effects on FCF level. First, a direct effect that results in an effect on agency costs. Second, an indirect effect on the FCF through dividend payouts.