The authors investigate R2 and its relationship with dividend payouts in the Korean stock market. R2 is derived from the market model regression. Their results are consistent with the previous literature on corporate governance and dividend payouts: they find that R2 is higher for business group (chaebol) firms and that there is a negative relationship between R2 and dividend payout. However, the relationship is not stronger for the business group firms than for the non-business group firms. The findings elucidate the relationship between R2 and dividend payout policy in the United States. [ABSTRACT FROM AUTHOR]