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dc.contributor.advisorBhabra, Gurmeet
dc.contributor.authorCoker, Timothy James Eric
dc.date.available2012-10-14T19:51:20Z
dc.date.copyright2012
dc.identifier.citationCoker, T. J. E. (2012). Corporate Governance and Payout Policy: an Analysis of the Impact of the Sarbanes-Oxley Act (Thesis, Master of Business). University of Otago. Retrieved from http://hdl.handle.net/10523/2490en
dc.identifier.urihttp://hdl.handle.net/10523/2490
dc.description.abstractIn this study I examine the effect of the tightening of corporate governance on the payout policy choice of companies following the passage of the Sarbanes-Oxley Act of 2002 (SOX). Given the endogeneity in the relationship between governance and payout, I employ a differences-in-differences approach to examine the relative change in payout for firms that were less compliant versus more compliant with the SOX corporate governance provisions in the pre-SOX period. The use of an exogenous shock to corporate governance avoids this endogeneity issue that has been an enduring concern of previous research and allows not only the detection of a relationship but also the causal direction. I find results that support the substitution hypothesis, whereby corporate governance and payout are used as substitute control mechanisms to reduce the agency costs of free cash flow. Total payout incidence and level decrease following the enactment of SOX. Further, firms decrease the proportion of dividends in payout. This is consistent with the substitution hypothesis that predicts firms move to a less restrictive payout policy following the tightening of corporate governance. Both the level and incidence of repurchases decrease following the enactment of SOX. No significant effect is observed for dividend incidence or level. Consistent with previous research, the effect is more pronounced for less compliant small firms compared to less compliant large firms. These results indicate that the enactment of SOX had a material effect on corporate payout policy, thus suggesting a significant relationship between governance and payout.
dc.language.isoen
dc.publisherUniversity of Otago
dc.rightsAll items in OUR Archive are provided for private study and research purposes and are protected by copyright with all rights reserved unless otherwise indicated.
dc.subjectSOX
dc.subjectSarbanes-Oxley
dc.subjectSarbanes
dc.subjectOxley
dc.subjectPayout
dc.subjectPay
dc.subjectOut
dc.subjectCorporate
dc.subjectGovernance
dc.subjectDividend
dc.subjectRepurchase
dc.subjectAgency
dc.subjectFCF
dc.subjectSubstitution
dc.subjectOutcome
dc.titleCorporate Governance and Payout Policy: an Analysis of the Impact of the Sarbanes-Oxley Act
dc.typeThesis
dc.date.updated2012-10-12T21:50:50Z
dc.language.rfc3066en
thesis.degree.disciplineDepartment of Accountancy and Finance
thesis.degree.nameMaster of Business
thesis.degree.grantorUniversity of Otago
thesis.degree.levelMasters
otago.interloanno
otago.openaccessAbstract Only
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