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JOURNAL OF APPLIED BUSINESS AND ECONOMICS

Board Financial Expertise and Corporate Payout Policy

Author(s): Amy E. Ji

Citation: Amy E. Ji, (2017) "Board Financial Expertise and Corporate Payout Policy," Journal of Applied Business and Economics, Vol. 19, Iss.10,  pp.10-24

Article Type: Research paper

Publisher: North American Business Press

Abstract:

This study investigates whether financial experts on the board affect firm economic decisions. Motivated

by agency theory, I examine the relationship between board financial expertise and corporate payout

policy. I find that board financial expertise influences a firm’s dividend policy. Furthermore, I find that

the level of agency costs proxied by the percentage of institutional ownership mitigates the relationship

between board financial expertise and dividend policies. Several additional analyses support the main

findings. The results are important as they demonstrate board financial expertise has effects beyond

financial reporting quality by affecting crucial corporate policies.