| Summary: | 碩士 === 國立臺灣大學 === 財務金融學研究所 === 106 === This paper investigates the relationship between abnormal corporate governance and dividend policy by using the sample of Taiwan’s public firms. Based on the agency theory proposed by La Porta et al. (2000), we consider two controversial hypotheses: the outcome and substitute hypotheses to discuss whether Taiwan’s dividend policy is used to solve agency problem. Different from the traditional corporate governance, we create an “abnormal corporate governance index” by controlling the characteristics of CEOs and firms and see how it affects dividend policy. Our empirical findings show that abnormal corporate governance is negatively correlated to cash dividend policy, which means that our results are consistent with “substitute model”. It can be seen that Taiwan’s dividend policy is more relevant to investment opportunities. The firms with better corporate governance often have lower agency cost and managers tend to use retained earnings to gain more benefit; thus, they will have less dividend payout but more investment opportunities. On the contrary, the firms with worse corporate governance, managers tend to pay dividends to relieve shareholders’ concerns of expropriation.
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