Corporate governance and dividend policy: A previous evidence from Colombia

The study measures the impact of the adoption of the Corporate Governance Code (CG) over the dividend payout ratio in the non-financial firms listed in the National Registry for Securities and Issuers (RNVE) of the Colombian Stock Exchange (CSE) prior to the enforcement of the “Code of better Corporate Practices" (CBCP) for quoted firms established by the Colombian authority at the end of 2007. This code consists of a survey that measures the fulfillment of a group of concrete requirements that all security issuers should follow. Through the application of a non-balanced panel data model on a sample of 279 companies, from 1997 to 2008, it resulted that those companies that adopted a voluntary Code have paid, on average, higher dividends than those that did not. In addition, the impact of the adoption of the Code is amplified by its quality, meaning that higher dividend's payments are attached to better Corporate Governance quality. Hence, prior to the adoption of the CBCP good corporate governance practices led towards a higher dividends in Colombia. The current assessment of the CBCP effects should be focused in
other aspects.