The Relationship Between Dividend Policy of a Company and the Quality of Corporate Governance at Different Life-Cycle Stages

The paper explores the relationship between the dividend policy of a company and the quality of corporate governance at different stages of the life cycle. There are two dividend models: “outcome”, according to which dividend payments are the result of a high level of corporate governance, and “substitute”, where dividend payout is a substitute for shareholders protection: poor corporate governance quality is offset by high dividends. As previous and subsequent works have not reached an agreement regarding whether which dividend model is observed, we check the type of relationship between dividend policy and corporate governance of Russian and European companies using the Tobit model. As a result, it turns out that the outcome model explains this relationship in European companies at the growth stage. The paper also pays attention to creditor rights. According to the results of empirical analysis, the indicator “creditor rights protection index” influences dividend payments and confirms the substitute model at the growth stage and the alternative model at the maturity stage.