Rookie directors and dividend payouts: Evidence from China

Abstract

This study examines the nexus between rookie independent directors and corporate dividend payouts among Chinese A-share firms between 2006 and 2020. The empirical results imply that rookie independent directors lead to enhanced corporate dividend payouts. This positive association is less pronounced in the presence of strong governance factors such as foreign ownership, Big-4 auditors, and higher analyst coverage. We identify that firm operating performance can work as a channel in the nexus mentioned above. Lastly, in light of our findings, we recommend that policymakers and shareholders in China should give adequate attention to rookie independent directors since they guard the interests of shareholders by efficiently and effectively monitoring corporate management.