The effect of corporate governance on dividend policy: An empirical analysis at BIST

One of the most controversial issues in finance is whether the decisions regarding the dividend policy of the firms affect the cash flows, market value and the welfare of the partners or not. Researchers have reached different conclusions when analyzing the factors behind the dividend policy behaviors of the firms. Factors that are considered to affect the dividend policy of a firm by the researchers are; the firm's ownership structure, profitability, size, operating risk, corporate governance, liquidity, the possibility of growth, taxation practices in the country, and legal regulations. Some of these factors have analysed according to different countries, sectors and the firms in the literature frequently. Generally, developed countries have been analysed in these researches but lately, emerging countries have started to become on the agenda. The increasing interest of the investors makes it necessary to analyse the emerging countries dividend policy. According to the results of some researches, one of the factors that affect the dividend policy is the corporate governance which aims to improve the effectiveness of the firm and protect the rights of the stakeholders via ensuring the firm to operate in compliance with some rules. Corporate governance handles every aspect of the relationship between the stakeholders (foremost shareholders and the investors) and the firms. The aim of this research is to determine the effects of corporate governance on the dividend payout policy of the firms which has a direct impact on the stakeholders. In line with this target, the data of the some publicly held companies from Istanbul Stock Exchange was collected for the nine years period from 2009 to 2017. These data analysed by the panel data method. The dividend payout ratio has been determined as the dependent variable, and the corporate governance rating is the independent variable. There are two control variables; firm size and firm profitability. The results of the panel data analysis find out that the corporate governance rating and firm profitability which is the control variable of the research has a statistically significant and positive effect on the dividend payout ratio. Ultimately according to the results, the firm size which is the other control variable is not statistically significant. Keywords: Dividend policy, corporate governance, panel data analysis, Istanbul Stock Exchange, dividend payout.