High-tech firms: Dividend policy in a context of sustainability and technological change

Abstract

We examine whether the dividend policy of high-tech firms is explained by ESG performance in the triple ESG components (environmental, social, and governance). Using a panel of US-based firms in the technology sector from 2002 to 2021, we find that better ESG scores are linked with a higher likelihood of dividend payments, stability of the amount paid, and implied shareholder returns from the dividend yield. R&D intensity is a constraint of dividend policies, although ESG scores mitigate this adverse effect by helping increase the likelihood of dividend payments. Overall, our findings highlight the role of ESG scores in enabling high-tech firms to implement dividend policies that yield stable returns to investors.