Women on the board and dividend payouts: the moderating effect of institutional ownership in France

Abstract

This paper investigates the effect of institutional ownership on the relationship between the characteristics of the directors' board and dividend payouts after the law enforcement on mandatory female quotas in France. We test our hypotheses on a sample of listed firms belonging to the SBF 120 index over the period 2009–2014. We find that the enforcement of this law reduces dividend payouts of firms non-dominated by institutional investors. It has, however, no significant effect on firms' paid dividends which are controlled by institutional stockholders. Tests of the moderating effects reveal that institutional ownership negatively moderates the effect of the board size but, positively moderates the impact of the new quota of women directors on dividend payouts. Institutional investors are powerful in monitoring the large number of directors to retain cash. On the contrary, the new fractions of women directors assume independent roles in forcing insiders to distribute more dividends.