Board composition, ownership structure and dividend policies in an emerging market: Further evidence from CASE 50
Abstract
Purpose
The purpose of this study is to examine dividend policies in an emerging capital market, in a country undergoing a transitional period.
Design/methodology/approach
Using pooled cross‐sectional observations from the top 50 listed Egyptian firms between 2003 and 2005, this study examines the effect of board of directors' composition and ownership structure on dividend policies in Egypt.
Findings
It is found that there is a significant positive association between institutional ownership and firm performance, and both dividend decision and payout ratio. The results confirm that firms with a higher return on equity and a higher institutional ownership distribute higher levels of dividend. No significant association was found between board composition and dividend decisions or ratios.
Originality/value
This study provides additional evidence of the applicability of the signalling model in the emerging market of Egypt. It was found that despite the high institutional ownership and the closely held nature of the firms, which imply lower agency costs, the payment of higher dividend was considered necessary to attract capital during this transitional period.
Keywords
Citation
Abdelsalam, O., El‐Masry, A. and Elsegini, S. (2008), "Board composition, ownership structure and dividend policies in an emerging market: Further evidence from CASE 50", Managerial Finance, Vol. 34 No. 12, pp. 953-964. https://doi.org/10.1108/03074350810915879
Publisher
:Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited