Corporate Governance and Dividend Policy: Their Influence on Firm Value in Iraqi Banks

Abstract

This study examines the impact of corporate governance and dividend policy on firm value in Iraqi banks over the period 2010–2024. Using panel data analysis with a balanced sample of 47 banks and 705 observations, the study investigates how governance mechanisms, such as independent commissioners, institutional ownership, managerial ownership, and dividend policies, influence firm performance. The results reveal that independent commissioners and institutional ownership positively impact firm value, emphasizing the importance of accountability and external monitoring. Dividend policy, measured through dividend payout ratio and dividend yield, significantly enhances firm value by signaling financial stability in a market characterized by high information asymmetry. Managerial ownership shows mixed effects, highlighting the need to balance managerial alignment with shareholder interests. The Fixed Effects model emerged as the most suitable approach, accounting for unobserved heterogeneity and explaining more variance compared to the Pooled OLS model. The study concludes that strengthening governance frameworks, promoting institutional ownership, adopting stable dividend policies, and enhancing financial transparency are critical for improving the performance and valuation of Iraqi banks. These findings provide practical insights for policymakers, bank executives, and investors in fostering stability and growth within Iraq’s banking sector.