Stock Liquidity, Corporate Governance and Dividend Payout: Evidence From Tehran Stock Exchange

Abstract

The main goal of this article is the impact of Corporate Governance and Stock Liquidity on the Dividend payout. In order to test the hypotheses, a sample of companies accepted in the Tehran Stock Exchange was selected between 2016 and 2021, which was analyzed using R software. The research method is multivariate regression using panel data. According to the research findings, there is not a meaningful relationship between Corporate Governance, Stock Liquidity and Dividend payout. Companies finance through debt regardless of the stock liquidity, therefore, stock liquidity does not have a decisive role in financing. Better corporate governance mechanisms apply more supervision, so that these mechanisms prevent the opportunistic behavior of managers and preventing them from hiding and manipulating information. By testing the mutual effect of stock liquidity and the quality of corporate governance, a significant relationship was found with the dividend payout of companies accepted in the Tehran Stock Exchange. The study tries to contribute to the current literature of corporate governance and stock liquidity by providing new evidence on the causal impacts of stock liquidity and corporate governance quality on dividend payout. Also, this study contributes to the literature on stock liquidity, corporate governance quality and dividend payout by exploring the mechanism of corporate governance quality and dividend payout from equity financing and internal financing.