The disciplinary role of the financial market could interact with a firm's choice of internal corporate governance. We prove that when the efficiency of the initial public offering (IPO) pricing improves, entrepreneurs choose stronger corporate governance structures as way of committing to extract fewer private benefits in exchange for higher prices. Using a difference-in-difference method that exploits the asymmetric impacts of the IPO pricing deregulation on the Chinese mainland and Hong Kong markets, we find that improving the efficiency of IPO pricing has a positive impact on a firm's corporate governance quality. This impact is more pronounced for firms with lower tangibility, for firms with higher market-to-book ratios, and for state-owned enterprises. Our findings demonstrate that the development of the financial market can promote economic development through improving corporate governance.

Employing 63,464 firm-year observations of 8876 companies in 22 countries from 2000 to 2013, we conduct a series of multiple regression analyses that reveal a significantly positive relationship between board gender diversity and dividend payouts. The empirical results confirm that board gender diversity facilitates corporate governance and consequently promotes dividend payouts. We also show that a good institutional environment may weaken the effect of board gender diversity on dividend payouts. Institutional ownership is positively associated with board gender diversity and that corporate dividend payouts increase when female senior executives have shareholdings. The findings of our analysis are robust after controlling for potential endogeneity concerns.