Chintrakarn P.Jiraporn P.Treepongkaruna S.Mook Lee S.Mahidol University2023-06-222023-06-222022-11-01North American Journal of Economics and Finance Vol.63 (2022)10629408https://repository.li.mahidol.ac.th/handle/20.500.14594/87526Motivated by agency theory, we investigate the effect of board independence on dividend policy. We exploit as a quasi-natural experiment the passage of the Sarbanes-Oxley Act and the associated exchange listing requirement, mandating firms to have a majority of independent directors. Our difference-in-difference estimates show that firms forced to raise board independence are significantly more likely to pay dividends than firms not required to change board independence. Our results are consistent with the notion that stronger board independence forces managers to disgorge more cash to shareholders, thereby reducing what is left for possible expropriation by opportunistic managers. Based on an exogenous regulatory shock, our results are more likely to show a casual effect, rather than merely an association.Economics, Econometrics and FinanceArticleSCOPUS10.1016/j.najef.2022.1018362-s2.0-85142195502