Investigating the impact of four proxies of agency costs on dividend policy in the context of listed companies of small island economies: a case study of Mauritius

Article


Boolaky, Pran Krishansing. 2009. "Investigating the impact of four proxies of agency costs on dividend policy in the context of listed companies of small island economies: a case study of Mauritius." International Journal of Accounting and Finance. 1 (3), pp. 276-301. https://doi.org/10.1504/IJAF.2009.026624
Article Title

Investigating the impact of four proxies of agency costs on dividend policy in the context of listed companies of small island economies: a case study of Mauritius

ERA Journal ID41212
Article CategoryArticle
Authors
AuthorBoolaky, Pran Krishansing
Journal TitleInternational Journal of Accounting and Finance
Journal Citation1 (3), pp. 276-301
Number of Pages26
Year2009
Place of PublicationUnited Kingdom
ISSN1752-8224
1752-8232
Digital Object Identifier (DOI)https://doi.org/10.1504/IJAF.2009.026624
Web Address (URL)http://www.inderscience.com/search/index.php?action=record&rec_id=26624&prevQuery=&ps=10&m=or
Abstract

The study investigates the impacts of four agency costs on the dividend policy of firms listed on the Stock Exchange of Mauritius Ltd. (SEM). It uses least squares regression to test and examine the impact of four Agency Cost Variables (ACVs), namely ownership dispersion, insider ownership, Free Cash Flow (FCF) and leverage ratio, on the Dividend Payout Decisions (DPOD) in the Mauritian-listed companies. Dividend payout is used as the dependent variable and the four mechanisms to control agency costs as
independent variables. This study reports that in the context of Mauritius, FCF is significantly related to the dividend payout ratio whilst leverage and ownership dispersion are very weakly related. However, this study also reveals that insider ownership is not related to dividend policy. Therefore, the results from this study support the conclusion reached by earlier empirical researches on FCF but do not affirm the same conclusions as regards leverage, ownership dispersion and insider ownership.

Keywordsagency cost; dividend policy; listed companies
ANZSRC Field of Research 2020350103. Financial accounting
380109. Industry economics and industrial organisation
380304. Microeconomic theory
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Byline AffiliationsSchool of Accounting, Economics and Finance
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