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The relationship between dividend policy and agency costs of non- financial listed firms on the johannesburg stock exchange (JSE)
(University of the Witswatersrand, Johannesburg, 2023) Simane, Madou Evah; Mbululu, D.
This study aimed to investigate the relationship between dividend policy and agency costs of non- financial firms listed on the Johannesburg Stock Exchange (JSE). The study was conducted using the dividend policy and agency theory framework. Data for the study was collected from Bloomberg and IRESS databases. The statistical software E-views was used for detailed analysis. The study used panel data for 67 JSE-listed companies for the period 2011 to 2022. The results showed that dividend payment has a negative relationship with asset turnover ratio, implying a positive relationship with agency costs. On the other hand, the management expense ratio as a proxy for agency costs showed that dividend payment can help reduce agency costs, consistent with the agency theory. The results further revealed that financial leverage can reduce agency costs. However, it could not be considered a significant factor in the reduction of agency costs because it is not statistically significant. Nonetheless, it can still play a role in helping resolve agency disputes among managers and shareholders. The results confirmed that there are agency problems among JSE-listed firms even though they are paying dividends.