The Impact of Corporate Governance on the Dividend Distribution Policy of Multinational and Domestic Enterprises

ABSTRACT Objective: this study examines the impact of a company’s status as a multinational enterprise (MNE) or a domestic enterprise (DE) on its dividend distribution policy. It also analyzes the moderating effect of corporate governance mechanisms on the payout ratios of MNEs. Methods: the research draws on a sample of 3,397 publicly traded companies (40,310 observations) listed on the stock exchanges of countries designated as OECD key partners - Brazil, China, India, Indonesia, and South Africa - between 2008 and 2019. Data were sourced from the Capital IQ Pro, Bloomberg, and PRS Group databases. The analysis employs logistic regression (logit) and censored regression models (tobit). Results: the results support the proposed hypotheses. MNEs tend to reinvest excess cash in their own projects, while DEs are more inclined to distribute profits to shareholders. Additionally, managerial ownership in MNEs alters this behavior, increasing the likelihood of dividend distribution. Conclusions: these findings offer insights for corporate decision-making in multinational firms, particularly when considering political risk and tax burden in the choice between profit retention and shareholder distribution.