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Dividend payout and executive compensation: theory and evidence from New Zealand

Dividend payout and executive compensation: theory and evidence from New Zealand Using a model based on Bhattacharyya (2007), we predict a positive (negative) relationship between the earnings retention ratio (dividend payout ratio) and managerial compensation. We use tobit regression to analyse data for New Zealand firms' dividend payouts over the period 1997–2015 and find results consistent with Bhattacharyya (2007). These results hold when the definition of payout is modified to incorporate both common dividends and common share repurchases. Our results indicate that corporate dividend policy among New Zealand firms is perhaps best understood by considering the dividend payout ratio, rather than the level of, or changes in, cash dividends alone. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Accounting & Finance Wiley

Dividend payout and executive compensation: theory and evidence from New Zealand

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References (25)

Publisher
Wiley
Copyright
Accounting and Finance © 2020 AFAANZ
ISSN
0810-5391
eISSN
1467-629X
DOI
10.1111/acfi.12399
Publisher site
See Article on Publisher Site

Abstract

Using a model based on Bhattacharyya (2007), we predict a positive (negative) relationship between the earnings retention ratio (dividend payout ratio) and managerial compensation. We use tobit regression to analyse data for New Zealand firms' dividend payouts over the period 1997–2015 and find results consistent with Bhattacharyya (2007). These results hold when the definition of payout is modified to incorporate both common dividends and common share repurchases. Our results indicate that corporate dividend policy among New Zealand firms is perhaps best understood by considering the dividend payout ratio, rather than the level of, or changes in, cash dividends alone.

Journal

Accounting & FinanceWiley

Published: Apr 1, 2020

Keywords: ; ;

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