The Impact of the Dividends and Administrative Rewards Policy on Reducing Agency Costs among Corporations listed in the Palestine Stock Exchange

Abstract

This study aims at showing the level of effect of cash dividends, stock dividends and administrative rewards on reducing agency costs. The study was applied on a sample of (30) Palestinian corporations listed in the Palestinian Stock Exchange during the period of 2006-2016. In order to achieve the study objectives, simple and multiple regression analysis based on time slowdowns were used. The results of the study showed that the Palestinian corporations listed in the Palestinian Stock Exchange suffer from high agency costs, and that those corporations resort to the option of cash dividends to reduce the agency costs. The study also showed that the administrative rewards, such as the bonuses paid to the board of directors or the bonuses granted to the executive management, adversely affect agency costs. The study recommends that the Palestinian companies should follow a fixed and clear dividend policy; in addition  to developing their administrative reward systems for the members of the board of directors and the executive management, in order to reduce the problem of conflicts of interest between shareholders and management.