Corporate governance and dividend distribution: evidence from the Brazilian Stock Market

Purpose: The study aims to analyze the influence of corporate governance quality on dividend distribution among non-financial Brazilian companies, with shares traded on the Brazil Bolsa Balcão (B3) between 2010 and 2020. Methodology: To achieve this objective, regression models were estimated using the instrumental variables (IV) approach, with a sample composed of 118 companies from 9 different sectors. As governance indicators, in addition to B3’s Differentiated Levels of Corporate Governance, the indices developed by Ribeiro and Souza (2023a) were used, covering the following mechanisms: Board of Directors, Ownership and Control Structure, Disclosure and Transparency, Managerial Incentives, and Level of Disclosure, as well as the sector of operation. Results: Corporate governance showed a negative and statistically significant relationship with dividend distribution in only one of the estimated models, while no significant relationship was observed in the other models. Additionally, Debt and Systematic Risk were positively associated with dividend distribution in most estimations, whereas Company Size and Current Liquidity were negatively related. Contributions of the Study: These findings provide valuable insights for managers and investors interested in investment strategies and capital remuneration policies in Brazilian companies. Moreover, the study contributes to academia by enriching the discussion on corporate governance and its influence on various aspects of corporate management.