Dividend Policy of Brazilian Companies with the Best Corporate Governance Practices
The article investigates the dividend policy profile of the companies which voluntarily listed themselves in the BM & FBovespa New Market segment, which is seen as the strictest one concerning the best practices of corporate governance in the stock Market. The aim is to check whether the moves in the Brazilian Stock Market to promote greater transparency, equity in the treatment among the shareholders and adherence to the best practices of corporate governance reflected in dividend decisions which pursued the maximization of shareholders´ wealth. Therefore, the conceptual model of Dividend Residual Theory, first established by Modigliani & Miller (1961) and reviewed by Jensen (1986) in the Free Cash Flow Theory, was used. Thus, through multivariate statistical techniques, it was evaluated how these companies administered the Free Cash Flow to Equity during the whole working period of the segment up to 2011. Moreover, it was sought to observe whether the decisions on the FCF caused impacts in the shareholders´ profitability, expressed by the Share Rate of Return (SRR). As a result, it was seen that a great part of the companies presented high level of overinvestment in the period, provoked by the FCFE holding, and that such a problem could have been the cause of a smaller SRR in some sectors.
