[Corporate Governance Mechanisms, Firm Performance and Dividend policy: Evidence from Australian and Jordanian Companies listed on the Stock Exchange Markets]

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Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

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TABLE OF CONTENTS

CHAPTER 1: INTRODUCTION1

1.1Background of the study1

1.2Statement of the Problem1

1.3Research questions3

1.4Research objectives4

1.5Significance and Motivations of the study4

1.6Contributions of the study5

1.7Organization of the thesis5

CHAPTER 2: LITERATURE REVIEW AND RESEARCH FRAMEWORK7

2.1.Corporate Governance and Firm Performance11

Current Corporate Governance System11

Regulatory Framework for Corporate Governance12

2.2.Corporate Governance and Dividend policy13

Trend of Corporate Governance in Australia19

Theoretical context19

2.3.Dividend policy and Firm Performance20

2.4 Legal and Quality framework21

2.5 Ownership structure22

2.6 Concentration22

2.7 Dividend Policy23

2.8 External Audit affect firm performance24

Research Design25

Literature Search25

Time Schedule (Gantt chart)26

REFERENCES27

CHAPTER 1: INTRODUCTION

Background of the study

Dividend policy is one of the most intriguing topics in financial research. Even now, economists provide considerable attention and thought to solving the dividend puzzle, resulting in a large number of conflicting hypotheses, theories and explanations. Researchers have primarily focused on developed markets; however, additional insight into the dividend policy debate can be gained by an examination of developing countries, which is currently lacking in the literature. Dividend policy in emerging markets is often different in its nature, characteristics, and efficiency, from that of developed markets. The purpose of this paper is to identify the factors that influence the dividend policy of firms listed in Australia & Jordan, while focusing on agency and transaction cost theory.

Statement of the Problem

Dividend policy has been the subject of considerable debate since Miller and Modigliani (1961) illustrated that under certain assumptions, dividends were irrelevant and had no influence on a firm's share price. Since then, financial researchers and practitioners have disagreed with Miller and Modigliani's proposition and have argued that they based their proposition on perfect capital market assumptions, assumptions that do not exist in the real world. Those in conflict with Miller and Modigliani's ideas introduced competing theories and hypotheses to provide empirical evidence to illustrate that when the capital market is imperfect, dividends do matter. For instance, the bird in the hand theory (predating Miller and Modigliani's paper) explains that investors prefer dividends (certain) to retained earnings (less certain): therefore, firms should set a large dividend payout ratio to maximise firm share price (Gordon, 1956; Lintner, 1956; Fisher, 1961; Walter, 1963; Brigham and Gordon, 1968). In the early 1970s and 1980s, several studies introduced tax preference theory (Brennan, 1970; Elton and Gruber, 1970; Litzenberger and Ramaswamy, 1979; Litzenberger and Ramaswamy, 1982; Kalay, 1982; John and Williams, 1985; Poterba and Summers, 1984; Miller and Rock, 1985; Ambarish et al., 1987). This theory suggests that dividends are subject to a higher tax cut than capital ...