The impact of board of directors’ characteristics on dividend policy: Evidence from a developing country

Abstract

The “dividend puzzle” has been an unresolved problem since the 1950s. The purpose of this paper is to investigate the nature and a level of the relationship between board characteristics dividend policy. The study used a positivistic approach and Spearman correlation metric, descriptive statistics, and binary regression models have been deployed as analytical tools. It is found that food and beverages sector had the highest percentage for dividend payout from 2015 to 2019. The highest percentage for women on boards was 13% in the land and property sector. The average board size for the selected companies was 8. The likelihood to pay dividends, women on boards, the board size, and CEO duality indicated a significant positive relationship. Panel regression results indicate that there is no significant relationship between board characteristics and the level of dividend payment for the selected sample. But in a sectorial analysis audit committee size has a significant negative relationship with the level of dividend payment in the manufacturing sector whereas board gender diversity has a significant positive relationship with the same in the food and beverage sector. In summary, dividend decision has been affected by several board characteristics, but such factors had no significant impact on the level of dividends declared in the market. The sectorial analysis revealed that several characteristics affected the level of dividends in two sectors

Do CEO Duality and Ownership Concentration Impact Dividend Policy in Emerging Markets? The Moderating Effect of Crises Period

“…According to Ahmed et al (2020), dividend policy is a "puzzle" whose determinants are still poorly understood. At the same time, the increase in additional research work on the DDP-like Taleb and Ben Lahouel (2020); Duqi et al (2020); Tahir et al (2020aTahir et al ( , 2020b; Endang et al (2020); Grey et al (2020); Juhmani (2020); Ahmed et al (2020); Thompson and Adasi Manu (2021); Ain et al (2021); Bataineh (2021); Dissanayake and Dissabandara (2021); Hasan et al (2021); Trinh et al (2021); El Ammari (2021) and even other authors-justifies the fact that this research topic is a topical subject and that the debate on the reality of this famous financial phenomenon is not yet closed and still requires heated debate.…”

“…On the other hand, based on the agency theory perspective, only a handful of recent studies (e.g., Chen et al 2017;Sumail 2018;Sanan 2019;Tahir et al 2020c;Graham et al 2020;Thompson and Adasi Manu 2021;Dissanayake and Dissabandara 2021) looked at the board of directors' characteristics as a key factor that could affect DDP. From this angle, special attention is drawn to the topic of CEO duality in the dividend policy literature; but still with no tangible evidence confirming the impact of this duality on dividend payouts (Baliga et al 1996).…”

Does political connection affect corporate financial performance? The moderating role of directors’ financial expertise

“…CEO duality (Board_D) is a dichotomous variable that equals 1 when the CEO is also the board chair and 0 when the two roles are separated (Tahir et al , 2020; Turrent et al , 2020; Ain et al , 2021; Dissanayake and Dissabandara, 2021);…”

“…Board size (Board_S) is measured by the total number of directors on the board (Tahir et al , 2020; Ain et al , 2021; Dissanayake and Dissabandara, 2021);…”

“…(2) TQ: Tobin's Q is constructed as the ratio of the market value of equity plus the book value of the total debts divided by the book value of total assets (Su and Fung, 2013;Ding et al, 2014;Pérez et al, 2015;Ben Cheikh and Taktak, 2017;Maaloul et al, 2018). CEO duality (Board_D) is a dichotomous variable that equals 1 when the CEO is also the board chair and 0 when the two roles are separated (Tahir et al, 2020;Turrent et al, 2020;Ain et al, 2021;Dissanayake and Dissabandara, 2021); Board size (Board_S) is measured by the total number of directors on the board (Tahir et al, 2020;Ain et al, 2021;Dissanayake and Dissabandara, 2021); Board independence (Board_I) is measured by the ratio of the number of independent directors to board size (Su and Fung, 2013;Maaloul et al, 2018) [2]; Firm size (Firm_S) is measured by the natural logarithm of total assets El Ammari, 2008, 2009;Pérez et al, 2015;Ciftci et al, 2019;Maaloul et al, 2018;Chertel et al, 2020;Niazia et al, 2021;El Ammari, 2021b); and Leverage ratio (Lev_R) is measured by the ratio of the book value of total debt (short-and long-term) to the book value of total assets (Li et al, 2008;Chen et al, 2011;Bliss and Gul, 2012;Su and Fung, 2013;Pérez et al, 2015;Bansal and Sharma, 2016;Ciftci et al, 2019;Niazia et al, 2021).…”