A Study on the Valuation Effect of Corporate Governance in Taiwan: Is There a Mediation Effect of Cash Dividend?
Date Issued
2015
Date
2015
Author(s)
Li, Yi-Syun
Abstract
This paper examines the mediation effect of cash dividend on the valuation effect of corporate governance by using panel data analysis and the test of mediator variable proposed by Baron and Kenny (1986). We construct a corporate governance index (“CG”) which includes managerial configurations, external monitoring mechanisms and information of related party transaction for Taiwan’s listed firms during the period of 2009 to 2013. We find a positive and significant relationship between CG and firm value in all samples. Furthermore, there is a positive relationship among dividend payout ratio, CG and firm value when firms face both agency problems and financial constraints. This evidence is consistent with the Outcome Model proposed by La Porta et al. (2000). Last but not least, we empirically demonstrate the mediation effect of cash dividend on the valuation effect of corporate governance. To the best of our knowledge, this effect has not been fully investigated.
Subjects
Cash dividend
Agency problem
Corporate governance
Firm value
Mediation effect.
Type
thesis
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