Corporate Governance and Dividend Reinvestment Plans: Insights from Imputation Tax in Australia

Date
2021-07
Authors
Shamsabadi, Hussein Abedi
Tebourbi, Imen
Nourani, Mohammad
Mina, Byung S.
Journal Title
Journal ISSN
Volume Title
Publisher
Elsevier Ltd
Abstract
This paper investigates the supply of Dividend Reinvestment Plans (DRPs) in relation to corporate governance and imputation tax system in Australia. Since DRPs are popular among large firms, we compiled the data of 300 largest companies listed on the Australian stock exchange (ASX300) during 2001-2013. Tobit regression method is used to estimate the models. Results indicate that good corporate governance leads to the higher supply of DRPs. We also found that franked dividend and heavily discounted DRPs weaken the positive association between governance and DRPs, illustrating the importance of institutional settings. Our findings imply that good corporate governance should consider a variety of clientele demands for dividend policy. © 2020
Description
This article is licensed under Creative Commons License and full text is openly accessible in CUD Digital Repository. The version of the scholarly record of this article is published in Finance Research Letters (2021), accessible online through this link https://doi.org/10.1016/j.frl.2020.101810
Keywords
Australia, Corporate governance, Dividend policy, Dividend reinvestment plans, Imputation tax
Citation
Shamsabadi, H. A., Tebourbi, I., Nourani, M., & Min, B. S. (2021). Corporate Governance and Dividend Reinvestment Plans: Insights from Imputation Tax in Australia. Finance Research Letters. 41. https://doi.org/10.1016/j.frl.2020.101810