Abstract
This study examines the effect of non-executive/independent directors on dividend payments in Indian-listed firms. Independent directors safeguard investor interests by ensuring an adequate return on investment through effective supervision; however, in countries with concentrated ownership, independent directors are unable to exercise their authority due to the opportunistic behavior of the promoter confirming entrenchment theory. The relationship between board size and dividend policy is consistent with the resource dependence theory, which posits that the skills and knowledge of directors are important to firm resources. Institutional investors negatively affect dividends because they use dividends to transfer funds from firms. Size and cashflows positively affect dividends, whereas leverage has a negative effect on dividends.
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