Corporate governance and the dividend policy: evidence from Thailand

This study investigates the relationship between corporate governance rating (CGR) that provide by Thai Institute of Directors (Thai-IOD) and the dividend decision in term of the decision to pay dividend and the amount of the dividend in the SET during the period of 2008 to 2022. I use the panel logit regression with robust standard error to find the relationship between governance rating and the decision to pay dividend. My findings show that corporate governance rating has a positive and significant relationship with the decision paying dividend. I use the panel tobit regression with robust standard error and the panel OLS regression with robust standard error to find the relationship between corporate governance rating and the amount of the dividend, and the result of both methods shows the positive relationship between the corporate governance rating and the amount of dividend that use both dividend yield and dividend payout to be the dependent variable. The result of relationship between corporate governance rating and both the decision to pay dividend and the amount of the dividend support the “outcome model” by La Porta et al, (2000). Moreover, this study investigates the relationship between the corporate governance rating and firm performance by using the panel OLS regression. The result shows the positive and significant relationship between corporate governance and firm performance (ROE, ROA, Tobin’s Q). the result illustrates that firm with higher corporate governance have higher performance and generate more profit. When firm generate more profit, the corporate governance protects the shareholder right by pressure management decision to pay more dividend the reduce the agency cost.