Does Corporate Governance Explain the Catering Theory of Dividend MENA Region?

Our analysis has several policy implications that are particularly relevant, allowing the passivity to better understand the implication of catering for dividends by examining the moderating role played by certain institutional variables. This idea has not been taken into account in previous studies, neither theoretically or empirically, but our results corroborate a way in which investors value dividends depends on the internal and external characteristics of the company and corporate governance mechanisms. In fact, our study further verifies which institutional variables moderate the payment of the dividend to managers' management actions. We trace firm characteristics and level corporate governance practices in six countries from Mena zone context, and in our empirical tests, we find that firms internal and external environment play an important role on the investor decision to demand or not dividend from firms. Our evidence also provides empirical support that external and internal mechanisms are important to force firms to disgorge cash and force the presence of a more general phenomenon of the catering. Moreover, our empirically estimation indicates a different result from our countries.