Corporate governance and catering investors' demand for dividends in Brazil
DOI:
https://doi.org/10.11606/issn.1982-6486.rco.2025.222041Keywords:
Outcome Model, Substitute Model, Dividend policy, Catering, Mandatory DividendsAbstract
An important factor in establishing a relationship of trust with investors, which can be used by companies, is the adoption of governance practices. In the literature it is discussed whether governance and dividends have a complementary relationship or a substitution relationship. However, previous studies have treated investors as agents who always have the same preference for dividends. This study aimed to investigate the influence of corporate governance practices on the dividend policy of Brazilian companies in light of variations in the demand for dividends. For this, regressions were carried out with panel data for a sample of 400 non-financial companies with shares listed on B3, covering data from the period between 2007 and 2022. The results brought support for the substitute model, with companies listed in special corporate governance segments paying less dividends. It was also pointed out that the substitute effect is stronger in times of low demand for dividends, that is, companies with strong governance standards are able to retain even more cash when investors' interest in dividends is lower. This study contributes to demonstrating that the adoption of corporate governance standards should be encouraged to build a safer investment environment and less dependent on mandatory dividend regulations.
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