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DOES A HIGH DIVIDEND PAYOUT RATIO SIGNAL PROPER CORPORATE GOVERNANCE OR HIGH AGENCY COST OF DEBT?
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Imad Jabbouri 
, Abdelillah El Attar
Abstract
This paper examines the relationship between dividend policy and the cost of debt in Morocco. The results show that high dividend payments reflect a low level of agency costs of equity and low information asymmetries. Consequently, creditors demand lower return for providing their capital to high dividend-paying firms. The findings reveal that creditors are less concerned with agency costs of debt. The study shows that the negative relationship between dividend payout ratios and cost of debt is more pronounced in firms with higher information asymmetries.
Keywords: Cost of Debt, Dividend Policy, Agency Problems, Information Asymmetries, Emerging Markets
Date received: 01 October 2016
Date accepted: 09 December 2016
How to cite this paper: Jabbouri, I., & El Attar, A. (2017). Does a high dividend payout ratio signal proper corporate governance or high agency cost of debt? Corporate Ownership & Control, 14(2), 51-58. https://doi.org/10.22495/cocv14i2art5
