Abstract
This study attempts to determine whether gender diversity on the firm's board affects the dividend payout ratio concerning firms listed on Nifty 50 in India. Multiple regression analysis and the logit model have been employed. The dependent variable is the dividend payout policy of the firm, and the independent variable is gender diversity. The regression model incorporated control variables that have been popularly listed in the extant literature. The robustness of the results has also been tested. It was found that there exists a positive association between the percentage of female directors and the dividend payout ratio. Results also found that there is a positive impact of the number of female directors on the dividend to total assets. This implies that gender diversity on board positively affects the payout ratio of firms. This study is the first of its kind to investigate the association of gender diversity on the firm's board and dividend payout ratio.
Highlights
In the past, several researchers have noticed that corporate governance influences the dividend payout ratio [6, 22]
The results indicate that boards having gender diversity have a higher possibility of making rational decisions and minimizes agency problems by protecting shareholders’ interest and eventually set higher Dividend payout ratio (DPR)
India, being an emerging economy, differs in terms of institutional settings from other developed nations, and due to India’s growth opportunities, world economies are looking toward India as a nation of investment opportunities
Summary
Several researchers have noticed that corporate governance influences the dividend payout ratio [6, 22]. Several studies have been conducted in the past which investigated the effect of board size [52], CEO duality [48], gender [44, 45] on the dividend policy of the firm. Very few studies examine the effect of gender diversity of board on dividend payout. No such study was conducted only on Indian firms that examine the impact of female representation on board on dividend payout ratio. Paying higher cash dividends to the shareholders reduces the amount of cash available to the firm, minimizing the agency problems [7]. The query is why the managers would declare higher dividends when they tend to retain cash? So, this can be made
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