The role of corporate governance in debt and dividend policies: case of Slovakia

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Do good corporate governance practices affect the amount of intermediated debt used by corporations and their dividend payout decisions? This study addresses the direct effects of corporate governance practices on both the indebtedness and the dividend pay-outs in corporations listed on the Bratislava Stock Exchange in 2015–2017 in Slovakia. Because of the relatively weakly developed stock market, the hypothesis is set only to found whenever there is a correlation between those variables. For analyzing the data, Spearman’s rank correlation was used because of the absence of normal distribution. Furthermore, authors adjusted the data set specifically in both cases to reflect more precisely the situation and increase the significance of the models. The most important result of this paper is the finding that the application of the corporate governance principles affects financial decisions of companies. There is a correlation between the responsible application of corporate governance principles and the total debt of companies. Also, there is a correlation between the responsible application of corporate governance principles and the amount of dividends paid to shareholders.

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    • Table 1. Correlations between corporate governance index and debt (the case of first adjustment)
    • Table 2. Correlations between Corporate Governance Index and indebtedness (2nd adjustment)
    • Table 3. Correlations between Corporate Governance Index and dividend pay-outs
    • Table A1. Evaluation of 1st, 2nd, 3rd and 4th criteria and results
    • Table B1. Evaluation of 5th and 6th criteria and results
    • Table C1. Evaluation of the 7th (7a, 7b, 7c) criteria and results