No full-text available
To read the full-text of this research,
you can request a copy directly from the authors.
Does Board Gender Diversity Increase Dividend Payouts? Analysis of Global Evidence
... (Ye et al., 2019;La Porta et al., 2000) ف (Firth et al., 2016) .ﻠ (Benjamin and Biswas, 2019) اﺳﺎت ر اﻟ ﻬ وﺗ . ...
... (Saeed and Sameer, 2017) . (Gul et al., 2011;Jiraporn et al., 2019;Chen et al., 2017;Byoun et al., 2016;Al-Rahahleh, 2017;Ye et al., 2019;Gyapong et al., 2019;Benjamin and Biswas, 2019) ﻣﻊ ﻠﻒ ﺗ ﺎ ﺑ ، اﺳﺎت در ﺎﺋﺞ ﻧ (Saeed and Sameer, 2017;Elmagrhi et al., 2017;Sanan, 2019;Eluyela et al., 2019;Anuar et al., 2020;Abdelsalam et al., 2008) . (Mancinelli and Ozkan, 2006;Kiel and Nicholson, 2003;Lital et al., 2011;Mansourinia et al., 2013;Elmagrhi et al., 2017;Adamu et al., 2017;Eluyela et al., 2019) ﻠﻒ ﺗ ﺎ ﺑ ، اﺳﺎت در ﺎﺋﺞ ﻧ ﻣﻊ (Ghasemi et al., 2013;Musa, 2014;Sani and Musa, 2017) . ...
... Almeida et al., 2020;Ye et al., 2019;Saeed and Sameer, 2017 ا ً ﻐ ﻣ ﻩ ّ ﻌ ة اﻹدار ﻠ ﻣ ﺣ ﻣ ﺔ اﻟ ة إدار ﻠ ﻣ ﺎء أﻋ د ﻋ ﯾ ﺗ ﻋ ﻘﻼ ﻣ اﻟ ﻘﺎر اﻟ ﺔ ّ اﻟ ﺔ ﺎﻟ ﻘﺔ ﺎ اﻟ اﺳﺎت ر اﻟ ﻣ ﯾ اﻟﻌ ﻓﻲ ﻣ َ اﺳ ﻲ اﻟ ﺔ ﺎ اﻟ(Almeida et al., 2020;Sanan, 2019;Ye et al., 2019; Saeed ﻓﻲ ة ﺛ اﻟ اﻣﻞ اﻟﻌ اﺳﺔ در ﻞ ﺳ ﻓﻲ ﻘﺔ اﻟ إﻟﻰ ب أﻗ ة ر ﺎذج اﻟ ﻬﺎر ﻹ ﺎح؛ اﻷر ﻌﺎت ز ﺗ إﻻ ، ﺔ ّ ﺎﺋ اﻹﺣ ﻬﺎ أﻫ ﻠ وﺗ ، ﺎﺣ اﻟ ﻟ ﺎم اﻫ ﻞ ﻣ ﻟ ﻬﺎ ّ أﻧ ون، وآﺧ م ﻟ )ز اﺳﺔ ر اﻟ ﺎذج ﻧ إﻟﻰ ﻬﺎ إﺿﺎﻓ 2016 َ ِ و .( اﻵﺗﻲ: وﻓ ﺔ ﺎ اﻟ ات ﻐ اﻟ -ﺔ اﻟ ﺣ ِ : ﻋ ل أﺻ ﺎﻟﻲ إﺟ اج اﺳ ﻓﻲ ﺎﯾ اﻟ ﻣ ﻠ وﻟﻠ ﺔ. ّ اﻟ ﺔ ّ ﺎﻟ اﻟ ﻘﺎر اﻟ ﻣ ﺔ اﻟ ﻋﻠﻰ رﺻﺔ اﻟ ﻓﻲ رﺟﺔ اﻟ ﺔ اﻟ ﺔ اﻟ ل أﺻ ﺎﻟﻲ إﺟ ) اﻷﺻ ﺎﻟﻲ إﺟ إﻟﻰ ﺔ ّ ﻠ ﻐ اﻟ ﺔ ّ ﻘ اﻟ َ ِ : ﻋ ل أﺻ ﺎﻟﻲ إﺟ ﻋﻠﻰ ﺔ ّ ﻠ ﻐ اﻟ ﺔ ّ ﻘ اﻟ ﻓﻘﺎت اﻟ ﺔ ﻗ ) ﺔ اﻟ ﯾ ﺗﻘ اﺳﺔ ر اﻟ ﺎذج ﻧ ﻓﻲ اﻟ ﺑ ة اﻹدار ﻠ ﻣ ع وﺗ ﺣ أﺛ ﺎر ﻻﺧ ﺔ: اﻵﺗ ات ﺎر ﻟﻼﺧ ﺎ ً وﻓﻘ ﺎذج اﻟ ت َ ر ّ ُ ﻗ ﺎح. اﻷر ﻌﺎت ز ﺗ -) ﺔ ﺿ اﻟﻔ H0 اﻟ ﺑ ة اﻹدار ﻠ ﻣ ع ﺗ أﺛ ﺎر ﻻﺧ ( ﻓﻲ ة اﻹدار ﻠ ﻣ وﺣ ( اﻷﻧ اﻟﻌ ﺔ ـ)ﻧ ﺑ ً ﻼ ﻣ ﺗ ﻋ ﺎح، اﻷر ﻌﺎت ز ﺗ ﺔ: اﻵﺗ ﺎذج اﻟ ﯾ ﻘ ﺎح ﺎﻷر ﻠﺔ ﻣ ﺎح اﻷر ﻌﺎت ز ﺗ : ﺔ؛ اﻟ ﺔ اﻟ إﻟﻰ زﻋﺔ اﻟ ﺑ ة اﻹدار ﻠ ﻣ ع وﺗ ﺣ أﺛ ﺎر ﻻﺧ ( ﺎح، اﻷر ﻌﺎت ز ﺗ ﻓﻲ ( أﻧ ﻋ د ـ)وﺟ ﺑ ً ﻼ ﻣ اﻟ ﺔ: اﻵﺗ ﺎذج اﻟ ﯾ ﺗﻘ ﻋ ﯾﻞ ﺗﻌ ﻓﻲ ل اﻷﺻ ﻋﻠﻰ اﻟﻌﺎﺋ دور ﺎر ﻻﺧ ( وﺣ ( اﻷﻧ اﻟﻌ ﺔ ـ)ﻧ ﺑ ً ﻼ ﻣ اﻟ ع ﺗ أﺛ ﺎذج اﻟ ﯾ ﺗﻘ ﻋ ﺎح، اﻷر ﻌﺎت ز ﺗ ﻓﻲ ة اﻹدار ﻠ ﻣ ﺔ: اﻵﺗ ﯾﻞ ﺗﻌ ﻓﻲ ل اﻷﺻ ﻋﻠﻰ اﻟﻌﺎﺋ دور ﺎر ﻻﺧ ( د ـ)وﺟ ﺑ ً ﻼ ﻣ اﻟ ﺑ ة اﻹدار ﻠ ﻣ ع وﺗ ﺣ أﺛ ﯾ ﺗﻘ ﻋ ﺎح، اﻷر ﻌﺎت ز ﺗ ﻓﻲ ( أﻧ ﻋ ﺔ: اﻵﺗ ﺎذج اﻟ ﺎس ﻣ م ِ ُ اﺳ و ول اﻟ ﻬ ك، اﻟ ﺎﻣﻞ اﻟ ﺎن ﻟ 2 ﺎر اﺧ ﺎﺋﺞ ﻧ ( ) ﺎر اﺧ ام ﺎﺳ ك اﻟ ﺎﻣﻞ اﻟ اﺳﺔ ر اﻟ ﺎذج ﻧ ﺎر اﺧ ﻣﻼءﻣﺔ اﻷﻛ اﺳﺔ، ر اﻟ ﺎت ﺿ ﻓ اﺳﺔ ر ﻟ ﻣﻌﺎدﻟﺔ ام ﺎﺳ ذج اﻟ ر ّ ُ ﻗ ) ﻐ اﻟ ﻌﺎت اﻟ ﺔ ﻬ ﻣ وﻓ ار اﻻﻧ OLS ﺎن وﻟ .( ...
This study aimed at identifying the effect of board size and board gender diversity on dividend payout and identifying the role of return on assets (ROA) in moderating the effect of size and board gender diversity on dividend payout. The study population consisted of (45) service shareholding companies listed in Amman Stock Exchange (ASE), during the period (2009-2018), using balanced panel data of (36) service companies with (360) observations. The results indicate that the level of female representation in the boards of service companies in Jordan is still low compared to other countries. The results also showed that board size and board gender diversity affect dividend payout. In addition, the return on assets moderates the effect of board size on dividend payout. The results also showed that the return on assets does not moderate the effect of board gender diversity on dividend payout. The study recommends that regulatory bodies should take a step towards encouraging gender diversity in boards to enhance board of directors' effectiveness, through amending legislations that regulate female participation in boards, such as the Jordanian Corporate Governance Code.
... In view of agency costs, the literature argues that firms should promote gender diversity because it is associated with enhanced dividend payments. Ye et al. (2019) depicted that gender diversity promotes dividend payments based on a large sample of 22 economies over the period 2000 to 2013. ...
... The key dependent variable is dividend payment (DIV), proxied by cash dividends over total assets. The proxy has been used in similar studies in the past (Trinh et al. 2021;Ye et al. 2019). The main independent variable is female CEO (FCEO). ...
... Firm size (SIZE) is proxied by natural logarithm of total assets. In general, larger firms with better access to markets tend to pay higher dividends (Suman and Singh 2022;Ye et al. 2019). Leverage (LEV) constitutes a key determinant of corporate dividend decisions. ...
The aim of this paper is to understand the perspective of female CEOs regarding corporate dividend decisions in the context of two large emerging economies, India and China. The study is based on listed firms from NIFTY 500 index and CSI 300 index over the period 2010 to 2021 from India and China, respectively. The study considers a total of 5,269 firm-year observations with 3,293 panel observations based on India and 1,976 observations based on China. Ordinary least squares (OLS) regression has been employed along with industry and year fixed effects. As robustness tests, we employ system GMM and lagged variables to confirm our findings. The findings depict the tendency of female CEOs to avoid dividend payments in Indian sample firms, highlighting a substitution effect between gender diversity and dividends. Female CEOs ameliorate corporate governance and discipline managers, and hence, the need to pay dividends to mitigate agency conflicts reduces. However, we find no significant impact in case of Chinese listed firms. Moreover, in a pioneer approach, the results depict that this decision does not harm the operating and market performance of the firm, and therefore, is in line with the goal of shareholders’ wealth maximization. The results remain consistent to more robust estimation techniques like GMM and lagged variables estimation. To our knowledge, ours is the first study that investigates the contribution of women CEOs in dividend decisions along with its impact on firm performance in India and China with such a sizeable sample. The study carries significant spill-over effects. It will have a considerable impact on the human resource management (HRM) practices with respect to diversity and inclusion. Moreover, it will help investors to make better decisions when investing in firms led by women, especially in developing and emerging economies.
... We find that board gender diversity enhances supervision, restriction, and fairness within firms, thus leading to decreased firm wage inequity. In addition, prior literature focuses mainly on the effect of board gender diversity on firm performance (Bernile et al., 2018;Gul et al., 2011;Ye et al., 2019). However, regarding wage inequity, most studies are limited to analyzing the gender wage inequity (e.g., Agarwal et al., 2019;Carter et al., 2017;Casarico & Lattanzio, 2022;Fernandes & Ferreira, 2021) and do not consider the wage inequity between executives and employees. ...
... A fast-growing body of literature provides empirical support that board gender diversity enhances a firm's financial performance (Campbell & Mínguez-Vera, 2008;Francoeur et al., 2008;Reguera-Alvarado et al., 2017), innovation (Griffin et al., 2021), and financial manipulation (Lai et al., 2017;Wahid, 2019). Specifically, a gender-diverse board puts more emphasis on monitoring, as reflected by better attendance at board meetings (Adams & Ferreira, 2009), higher dividend payouts (Chen et al., 2017;Ye et al., 2019), and more short-term debt Li & Zhang, 2019). Female directors can also improve decision making, such as decisions on top managers' compensation (Lucas-Pérez et al., 2015), and mitigate overconfidence (Doan & Iskandar-Datta, 2021). ...
... In listed companies, the board of directors is the main mechanism responsible for governance and supervision policies; this is why various studies consider how certain features of a board can affect the monitoring and design of top managers' compensation (e.g., Core et al., 1999). In this stream of literature, more attention is paid to the economic consequences of board gender diversity (e.g., Bernile et al., 2018;Harjoto et al., 2015;Ye et al., 2019). Some studies show that gender diversity on boards of directors increases firm value (Campbell & Mínguez-Vera, 2008). ...
This study examines whether and how board gender diversity can affect corporate wage inequity by drawing on diversity theory and gender socialization and ethicality theories. Building on an exogenous relaxation of China’s one-child policy (OCP) in 2013, which led to a substantial decline in the female labor force participation rate. Our empirical analysis suggests that board gender diversity is negatively associated with corporate wage inequity. This result is robust to various endogeneity and sensitivity analyses. We find that the OCP relaxation only increases average executive pay; it does not affect employee pay. One potential mechanism driving our results is that the decline in board gender diversity caused by the OCP relaxation reduces supervision, restriction, and fairness within the firm, which increases executives’ pursuit of personal interests and ultimately leads to the rise of wage inequity. Our findings are particularly significant for firms in capital-intensive industries, firms with a low level of employee bargaining power, and large firms.
... One aspect that has been promoted in the corporate governance code in many countries is board diversity and inclusion. This prompted studies to look at the influence of board membership in terms of gender (Ye et al. 2019), expertise (Güner et al. 2008), experience (White et al. 2014), education (Nawaz 2022a, b), and ethnicity (Haniffa and Cooke 2002;Haniffa and Hudaib 2006) on governance quality, firm performance, and disclosure practices. More recently, studies have explored whether inclusion of directors with diversified traits such as academicians, accounting and finance experts (Güner et al. 2008) and those with military service experience (Malmendier et al. 2011;Benmelech and Frydman 2015;Li and Rainville 2021) can have direct implications on corporate operations and policy outcomes. ...
... Second, we add new insights to the growing literature on corporate dividend policy (e.g., Ye et al. 2019) in general, as well as extend the emerging literature stream analysing the effects of military directors on corporate dividend policy (Kim et al. 2017), particularly in the context of emerging economy (Jaroenjitrkam and Maneenop, 2022), by establishing that inclusion of military directors to corporate boards reduces free cashflow opportunities available to agents to benefit themselves by promoting higher dividend payout to shareholders. Our result is opposite to Jaroenjitrkam and Maneenop (2022) and Kim et al. (2017) in the context of Thailand and Korea, respectively. ...
... In this vein, Herron (2021) highlights that in weak legal regimes, firm-level governance increases dividend payout ratios, thus implying that firm-level governance is effective at increasing shareholder rights in weak legal regimes. In short, firms represented by directors with diversified talents and expertise increase board's monitoring capability, which in turn helps to alleviate information asymmetry between management and outside investors (Ye et al. 2019). ...
This paper explores the influence of military directors in protecting shareholders’ wealth through CEO compensation and corporate dividend payout policies. Based on manually collected data on corporate boards of non-financial companies operating in Pakistan, the results indicate a significant negative association between the presence of military directors on corporate boards and CEO compensation, thus supporting the notion that such directors are effective in monitoring and curtailing excessive rent seeking behaviour by the agents. In other words, presence of military directors on Pakistani corporate boards reduces agency costs and in turn enhances shareholders’ wealth. Results also indicate significant positive relationship between presence of military directors on boards and dividend payout, hence signifying that such directors are effective in enhancing shareholders’ wealth by reducing free cash flow opportunities that would otherwise be deployed by agents for their private benefits. We further found military directors with business education and wider networks to have significant positive association with dividend payout but not the case with CEO compensation. We control for board attributes, agent heterogeneity and firm-specific attributes in all our models. Overall, the benefits of military directors’ inclusion on corporate boards in Pakistan have far broader strategic, economic and policy implications on the nation besides resolving the principal-agent problems in the boardroom.
... Therefore, researchers start to focus on another aspect of dividend policy, respectively finding its determinants. There are at least two main directions of research, respectively finding the factors that influence the size of the dividends, mainly the size of dividend pay-out ratio , and factors that influence the propensity to distribute dividends (Fama & French, 2001;Denis & Osobov, 2008;Ye et al., 2019) described as a dummy variable with 1 if dividends are accrued or 0 if not. According to Rohov et al. (2020), profitability indicators, liquidity and firm size are one of the most studied factors. ...
... Other determinants taken into consideration are financial leverage (Belo et al., 2015;Cooper & Lambertides, 2018), dividend to cash flow (La Porta et al., 2000), market risk (Ye et al., 2019) and investment opportunity (Renneboog & Trojanowski, 2011) among many others, as well as non-financial indicators like Gini Index, social progress index, religion, harmony and hierarchy (Yassen & Dragotă, 2019) just to give some examples. However, the importance or the positive/negative impact of these determinants are also debatable, deepening the difficulty of dividend policy prediction. ...
... Regarding the empirical methods, one of the most used techniques are Linear Regression (He et al., 2017), Logistic Regression (Denis & Osobov, 2008), and Tobit Regression (Ye et al., 2019). More sophisticated models have been introduced in the seminal paper of Bae (2010). ...
Dividend policy is one of the most discussed and controversial topics in corporate finance for decades. Due to the increase of computational power, few scholars tried to find most informative determinants with the help of advanced heuristic methods, a.k.a. Machine Learning. However, some critiques need to be addressed regarding the metric scores, model selection or robustness of their approaches. This paper proposes a working methodology that deals with these critiques. A Principal Components Analysis as well as numerous ML models, resample techniques and metric scores have been applied in order to better understand the dividend puzzle. The conclusions suggest that the size of the companies is the most informative determinant, larger and less risky firms being more likely to pay dividends.
... A large number of studies agree that gender-diverse boards pay higher dividends. Ye et al. (2019) examined the impact of board gender diversity on dividend pay-outs in a sample involving 22 countries between the period 2000 and 2013. The results revealed that board gender diversity plays a significant role in reducing agency problems and increases the dividend pay-out ratio. ...
... Their study involved 1500 companies between the periods 1997 and 2011. Their results were consistent with those of Ye et al.(2019). They concluded that companies with female directors issued out higher dividends because of increased monitoring activity. ...
... The results show that there is a positive relationship between gender diversity and dividend pay-out. The relationship direction is expected as it supports the agency perspective, which posits that gender-diverse boards are more inclined to pay higher dividends due to increased monitoring by female directors (Ye et al., 2019). ...
Objective: To investigate the relationship between corporate governance board characteristics and dividend pay-out (e.g. dividend pay-out ratio). Method: A panel regression analysis was undertaken to investigate the relationship between corporate governance board characteristics and dividend pay-out (e.g. dividend pay-out ratio). Data was collected from a sample of 29 firms in the top-40 of the Johannesburg Stock Exchange (JSE). Data collected spanned for a period of five years from 2013 – 2018 Results: Obtained result demonstrate that there is a significant relationship between board diversity, as measured by ethnicity, the board independence and the dividend pay-out ratio. Originality/Relevance: Previous studies have asserted that corporate governance affects the level of dividends paid out by a firm. What has remained unclear with the previous studies is whether the dividend pay-out is an outcome or a substitute for effective governance. Theoretical/methodological contributions: The results suggest that there is a strong evidence in favour of the substitution hypothesis, where JSE top 40 boards with a higher degree of independence did not need to use dividends as a tool for monitoring managerial behaviour. The results illustrate evidence supporting the maturity and dividend smoothing theories, and this is observed through the significant relationships established between profitability, previous dividend and the dividend pay-out ratio. Social/management contributions: The main contribution of this study being the establishment of the determinants of dividend pay-out policy in South Africa’s JSE listed companies.
... This is consistent with Black's (1976) analysis that the importance and practice of paying dividends becomes a "dividend puzzle". As a result, dividend policy has become a perennial research topic (Ye et al., 2019). ...
... First, gender diversity leads to stable profitability (Lara et al., 2017). Female directors can reduce agency costs through their support for dividend payments (Adamu et al., 2017;Chen et al., 2017;Naburi & Ndede, 2019;Ngo et al., 2019;Thompson & Adasi Manu, 2020;Ye et al., 2019). However, this study is difficult to find in developing countries such as Indonesia. ...
... Furthermore, it was mentioned earlier that the source of dividend policy is profitability. Previous studies have proven that profitability has a positive and significant relationship with dividend payments (Benjamin & Biswas, 2019;Tahir et al., 2020;Ye et al., 2019). However, they treat profitability as a control variable, so the empirical relationship is not thoroughly analyzed. ...
Purpose: This study investigates the effect of the board of directors (BOD) diversity on dividend policy and how the implications of profitability are treated as moderation. Dividend policy and BOD characteristics have been studied extensively; however, the profitability role being moderating variable and BOD diversity are challenging. To the best of the authors' knowledge, this study is one of the first to examine profitability as moderation. BOD diversity includes gender, age, education level, accounting expertise, and nationality. The research period spanned 2017-2020, where the number of samples was 370 companies listed on the Indonesia Stock Exchange, resulting in 1,480 data. The regression model used is panel data. Overall, BOD gender, education level, and nationality are homogeneous, where female directors, directors with master's education, and foreign directors have a small proportion. As a result, they have no significant effect in promoting dividends. In addition, profitability cannot influence the relationship between board gender and board nationality on dividends. Nevertheless, profitability moderates the relationship between board nationality and dividend policy to a significant negative. Further, board age and accounting expertise positively and significantly affect dividend policy, and the results are identical when moderated by profitability. The proportion of board expertise expressed is heterogeneous, and the board age of 52 years is categorized as old, while they mitigate agency conflict. Thus, companies are required to maintain these proportions. However, companies must remedy the recruitment system to accommodate more female directors, directors with higher education at the master's level, and foreign directors. The government must also refer to regulations in developed and developing countries that establish a minimum quota for the presence of female directors.
... The company seeks to increase gender diversity in the company's board of commissioners; this is done to reduce agency problems that shareholders will face. In addition, the existence of gender diversity can facilitate corporate governance so that it can pay higher dividends (Ye, Deng, Liu, Szewczyk, & Chen, 2019). Based on this explanation, this governance research will use several proxies, namely the proportion of women commissioners, the proportion of women independent commissioners, the size of the board of commissioners, independent commissioners, board of commissioners meetings, and the size of the audit committee. ...
... Research shows that the gender diversity of the board of commissioners has a significant positive effect on the dividend payout ratio of companies in various countries. (Chen, Leung, & Goergen, 2017;Fauziah & Probohudono, 2018;Ye et al., 2019). This study differs from the results of Tahir, Rahman, & Masri (2020). ...
... These arguments can be used as a fundamental argument to support those female commissioners can improve decision-making by bringing various perspectives and opinions into the decision-making process. Increasing gender diversity at the board level can reduce cases of corporate fraud and insider trading (Ye et al., 2019). Female commissioners prefer to pay higher dividends. ...
Pupose: The existence of market uncertainty can increase agency problems that raise doubts about future cash flows, such as dividend payments. This study aims to analyze the effect of corporate governance such as the proportion of female commissioners, the proportion of female independent commissioners, the board size, board independence, board meeting, and audit committee size towards a dividend payout ratio. Method:The sample of this research is manufacturing sector companies listed on the Indonesia Stock Exchange (ISE) and the Thailand Stock Exchange (TSE). The company should have published financial reports that have been audited regularly during the study period, and the company has no negative retained earnings. This study uses a quantitative approach with two least square regression analysis models. Result: The observations on the ISE shows that the proportion of female independent commissioners and audit committee size has a significant positive effect on the dividend payout ratio. This result is because female commissioners can take control of minority shareholders by making larger payments and audit committee members can monitor more effectively and control opportunistic behavior. However, board independence and board meeting significantly adversely affect the dividend payout ratio, this is because more members of board independence and more frequent meetings can use dividends as a substitute role in reducing agency problems so that dividend payment will be below. The observations on the TSE shows that the proportion of female independent commissioners and board meetings significantly positively affects the dividend payout ratio. However, board independence has a significant adverse effect on the dividend payout ratio. This result is because board independence tends to reduce agency costs, so using dividends as a substitute role to reduce dividend payments.
... (Ye et al., 2019;La Porta et al., 2000) ف (Firth et al., 2016) .ﻠ (Benjamin and Biswas, 2019) اﺳﺎت ر اﻟ ﻬ وﺗ . ...
... (Saeed and Sameer, 2017) . (Gul et al., 2011;Jiraporn et al., 2019;Chen et al., 2017;Byoun et al., 2016;Al-Rahahleh, 2017;Ye et al., 2019;Gyapong et al., 2019;Benjamin and Biswas, 2019) ﻣﻊ ﻠﻒ ﺗ ﺎ ﺑ ، اﺳﺎت در ﺎﺋﺞ ﻧ (Saeed and Sameer, 2017;Elmagrhi et al., 2017;Sanan, 2019;Eluyela et al., 2019;Anuar et al., 2020;Abdelsalam et al., 2008) . (Mancinelli and Ozkan, 2006;Kiel and Nicholson, 2003;Lital et al., 2011;Mansourinia et al., 2013;Elmagrhi et al., 2017;Adamu et al., 2017;Eluyela et al., 2019) ﻠﻒ ﺗ ﺎ ﺑ ، اﺳﺎت در ﺎﺋﺞ ﻧ ﻣﻊ (Ghasemi et al., 2013;Musa, 2014;Sani and Musa, 2017) . ...
... Almeida et al., 2020;Ye et al., 2019;Saeed and Sameer, 2017 ا ً ﻐ ﻣ ﻩ ّ ﻌ ة اﻹدار ﻠ ﻣ ﺣ ﻣ ﺔ اﻟ ة إدار ﻠ ﻣ ﺎء أﻋ د ﻋ ﯾ ﺗ ﻋ ﻘﻼ ﻣ اﻟ ﻘﺎر اﻟ ﺔ ّ اﻟ ﺔ ﺎﻟ ﻘﺔ ﺎ اﻟ اﺳﺎت ر اﻟ ﻣ ﯾ اﻟﻌ ﻓﻲ ﻣ َ اﺳ ﻲ اﻟ ﺔ ﺎ اﻟ(Almeida et al., 2020;Sanan, 2019;Ye et al., 2019; Saeed ﻓﻲ ة ﺛ اﻟ اﻣﻞ اﻟﻌ اﺳﺔ در ﻞ ﺳ ﻓﻲ ﻘﺔ اﻟ إﻟﻰ ب أﻗ ة ر ﺎذج اﻟ ﻬﺎر ﻹ ﺎح؛ اﻷر ﻌﺎت ز ﺗ إﻻ ، ﺔ ّ ﺎﺋ اﻹﺣ ﻬﺎ أﻫ ﻠ وﺗ ، ﺎﺣ اﻟ ﻟ ﺎم اﻫ ﻞ ﻣ ﻟ ﻬﺎ ّ أﻧ ون، وآﺧ م ﻟ )ز اﺳﺔ ر اﻟ ﺎذج ﻧ إﻟﻰ ﻬﺎ إﺿﺎﻓ 2016 َ ِ و .( اﻵﺗﻲ: وﻓ ﺔ ﺎ اﻟ ات ﻐ اﻟ -ﺔ اﻟ ﺣ ِ : ﻋ ل أﺻ ﺎﻟﻲ إﺟ اج اﺳ ﻓﻲ ﺎﯾ اﻟ ﻣ ﻠ وﻟﻠ ﺔ. ّ اﻟ ﺔ ّ ﺎﻟ اﻟ ﻘﺎر اﻟ ﻣ ﺔ اﻟ ﻋﻠﻰ رﺻﺔ اﻟ ﻓﻲ رﺟﺔ اﻟ ﺔ اﻟ ﺔ اﻟ ل أﺻ ﺎﻟﻲ إﺟ ) اﻷﺻ ﺎﻟﻲ إﺟ إﻟﻰ ﺔ ّ ﻠ ﻐ اﻟ ﺔ ّ ﻘ اﻟ َ ِ : ﻋ ل أﺻ ﺎﻟﻲ إﺟ ﻋﻠﻰ ﺔ ّ ﻠ ﻐ اﻟ ﺔ ّ ﻘ اﻟ ﻓﻘﺎت اﻟ ﺔ ﻗ ) ﺔ اﻟ ﯾ ﺗﻘ اﺳﺔ ر اﻟ ﺎذج ﻧ ﻓﻲ اﻟ ﺑ ة اﻹدار ﻠ ﻣ ع وﺗ ﺣ أﺛ ﺎر ﻻﺧ ﺔ: اﻵﺗ ات ﺎر ﻟﻼﺧ ﺎ ً وﻓﻘ ﺎذج اﻟ ت َ ر ّ ُ ﻗ ﺎح. اﻷر ﻌﺎت ز ﺗ -) ﺔ ﺿ اﻟﻔ H0 اﻟ ﺑ ة اﻹدار ﻠ ﻣ ع ﺗ أﺛ ﺎر ﻻﺧ ( ﻓﻲ ة اﻹدار ﻠ ﻣ وﺣ ( اﻷﻧ اﻟﻌ ﺔ ـ)ﻧ ﺑ ً ﻼ ﻣ ﺗ ﻋ ﺎح، اﻷر ﻌﺎت ز ﺗ ﺔ: اﻵﺗ ﺎذج اﻟ ﯾ ﻘ ﺎح ﺎﻷر ﻠﺔ ﻣ ﺎح اﻷر ﻌﺎت ز ﺗ : ﺔ؛ اﻟ ﺔ اﻟ إﻟﻰ زﻋﺔ اﻟ ﺑ ة اﻹدار ﻠ ﻣ ع وﺗ ﺣ أﺛ ﺎر ﻻﺧ ( ﺎح، اﻷر ﻌﺎت ز ﺗ ﻓﻲ ( أﻧ ﻋ د ـ)وﺟ ﺑ ً ﻼ ﻣ اﻟ ﺔ: اﻵﺗ ﺎذج اﻟ ﯾ ﺗﻘ ﻋ ﯾﻞ ﺗﻌ ﻓﻲ ل اﻷﺻ ﻋﻠﻰ اﻟﻌﺎﺋ دور ﺎر ﻻﺧ ( وﺣ ( اﻷﻧ اﻟﻌ ﺔ ـ)ﻧ ﺑ ً ﻼ ﻣ اﻟ ع ﺗ أﺛ ﺎذج اﻟ ﯾ ﺗﻘ ﻋ ﺎح، اﻷر ﻌﺎت ز ﺗ ﻓﻲ ة اﻹدار ﻠ ﻣ ﺔ: اﻵﺗ ﯾﻞ ﺗﻌ ﻓﻲ ل اﻷﺻ ﻋﻠﻰ اﻟﻌﺎﺋ دور ﺎر ﻻﺧ ( د ـ)وﺟ ﺑ ً ﻼ ﻣ اﻟ ﺑ ة اﻹدار ﻠ ﻣ ع وﺗ ﺣ أﺛ ﯾ ﺗﻘ ﻋ ﺎح، اﻷر ﻌﺎت ز ﺗ ﻓﻲ ( أﻧ ﻋ ﺔ: اﻵﺗ ﺎذج اﻟ ﺎس ﻣ م ِ ُ اﺳ و ول اﻟ ﻬ ك، اﻟ ﺎﻣﻞ اﻟ ﺎن ﻟ 2 ﺎر اﺧ ﺎﺋﺞ ﻧ ( ) ﺎر اﺧ ام ﺎﺳ ك اﻟ ﺎﻣﻞ اﻟ اﺳﺔ ر اﻟ ﺎذج ﻧ ﺎر اﺧ ﻣﻼءﻣﺔ اﻷﻛ اﺳﺔ، ر اﻟ ﺎت ﺿ ﻓ اﺳﺔ ر ﻟ ﻣﻌﺎدﻟﺔ ام ﺎﺳ ذج اﻟ ر ّ ُ ﻗ ) ﻐ اﻟ ﻌﺎت اﻟ ﺔ ﻬ ﻣ وﻓ ار اﻻﻧ OLS ﺎن وﻟ .( ...
This study aimed at identifying the effect of board size and board gender diversity on dividend payout and identifying the role of return on assets (ROA) in moderating the effect of size and board gender diversity on dividend payout. The study population consisted of (45) service shareholding companies listed in Amman Stock Exchange (ASE), during the period (2009-2018), using balanced panel data of (36) service companies with (360) observations. The results indicate that the level of female representation in the boards of service companies in Jordan is still low compared to other countries. The results also showed that board size and board gender diversity affect dividend payout. In addition, the return on assets moderates the effect of board size on dividend payout. The results also showed that the return on assets does not moderate the effect of board gender diversity on dividend payout. The study recommends that regulatory bodies should take a step towards encouraging gender diversity in boards to enhance board of directors' effectiveness, through amending legislations that regulate female participation in boards, such as the Jordanian Corporate Governance Code.
... Our sample selection starts with the director-firm-year data universe of BoardEx. The starting sample consists of 1.05 million director-level observations from over 15,000 unique firms between 1999 and 2016 from 43 countries, excluding island nations such as the Virgin Islands and Cayman Islands (Ye et al. 2019). Nearly 40%, or 428,962 director-firm-years observations, are executive directors. ...
... Our matched sample results remain qualitatively similar (see Table G in the Supplementary Files). Third, it is important to note that cross-country studies like this one, among others (Ye et al. 2019;Homroy and Mukherjee 2021), often risk having their main results influenced by a single large country, such as the United States. This is due to its significant economic size and better coverage in financial and governance databases, or unique features of the executive recruitment process and exit decisions. ...
We examine the speed of advancements and exits of female executive directors vis‐à‐vis comparable men. In line with recent research, we suggest that women are likely to experience an apparent gender‐based advantage in the form of lower age at the time of their first‐ever executive director appointment. However, we argue that this advantage may be transitory. Appointed women also experience faster exits from these positions, with age partially mediating the differential speed of exits between male and female executive directors. We also contend that these effects are contingent on countries' local gender norms (especially women's economic participation) such that lower gender parity leads to even lower ages at appointments and faster exits for female executive directors. Results based on 15,202 unique rookie executive directors from 33 countries between 2002 and 2015 largely support these predictions.
... Chairs. (Ye et al., 2019); Board Tenure and Outside Affiliations of directors'; Board Supervisory 11 structure, i.e., whether firms have both a supervisory and an executive board (Denis & McConnell, 2003;Ferreira & Kirchmaier, 2013); Certified Directors -whether directors with outside affiliations have their abilities "certified" by the board labor market (Masulis & Mobbs, 2011) and Board Financial Expertise to control for boards' fungible expertise. Furthermore, we include several salient indicators of firm performance and corporate structure. ...
... to prior studies in this literature on the availability of board composition data, U.S. observations dominate our dataset(Ye, Deng, Liu, Szewczyk, & Chen, 2019;Homroy & Mukherjee, 2021;Mukherjee & Bonestroo, 2021) ...
... Considerable research examines the impact of board diversity factors, mostly in developed markets. These factors focus on gender but also include nationality, age, and tenure in dividend policy (Sharma, 2011;Hamzah & Zulkafli, 2014;McGuinness et al., 2015;Byoun et al., 2016;Chen et al., 2017;Setiawan & Aslam, 2018;Ye et al., 2019;Ain et al., 2021). Baker et al. (2020) conduct a bibliometric analysis of 579 prominent studies between 1999 and 2019. ...
... The empirical evidence suggests mixed and inconclusive findings. The relationship between gender diversity and dividend payouts is positive and significant in developed markets such as the United States (Byoun et al., 2016), Spain (Pucheta-Martínez & Bel-Oms, 2016), S&P 1500 companies (Chen et al., 2017), and 22 developed countries (Ye et al., 2019). In emerging markets, such a relationship is inconclusive. ...
This study investigates the association between board diversity attributes – gender, experience, age, nationality, educational level, and tenure ‒ and dividend policy in Indian firms. We use the dividend payout ratio and dividend yield in a panel Tobit regression model. Our panel dataset comprises 65 firms drawn from the NIFTY 100 Index of India's National Stock Exchange (NSE) between 2013 and 2019. Our evidence shows that gender and experience diversities help explain why firms pay high dividends. Female directors encourage paying high dividends. In contrast, age diversity is a negative determinant of dividend policy. Foreign directors are an insignificant determinant of a firm's dividend policy, perhaps because they represent a small percentage of the board. Educational and tenure diversities are also insignificant drivers of dividend policy. This study contributes to agency and resource dependence theories by considering specific board diversity attributes among Indian firms related to dividend payments.
... On the flip side, complex firms such as large firms, firms with more debts and firms that are diversified across several industries may perform better with larger boards due to higher advising needs (Coles et al., 2008;Germain et al., 2014) and better disclosure of information (Chau and Gray, 2002). Board gender diversity (BDGENDER) is also incorporated as the percentage of female directors on the board (Ujunwa, 2012;Ye et al., 2019). Gender diverse BODs may facilitate effective decision-making since diversity promotes extensive discussion and communication among board members and the sharing of various perspectives, which may lead to better firm performance (Gul et al., 2011). ...
... As robustness check and to address potential endogeneity issues as well as to determine the direction of causality, this paper follows Pandey et al. (2015) and Ye et al. (2019) by repeating the main regression analysis using lagged independent variables. The findings in Table 10 demonstrate that the coefficient for lagged board meetings remains significantly negative for all five proxies for firm performance, thus reaffirming the robustness of the central findings in Table 5. ...
This paper examines the relationship between the frequency of board meetings as a measure of board activity and firm performance based on a sample of the top 100 Malaysian listed firms over the period 2013 to 2017. This study also performs sub-sample analyses to determine whether this relationship is conditional on certain internal factors such as firm size, founder status of the CEOs and chairs and board size. The results demonstrate that more frequent board meetings exert a negative effect on firm performance. Furthermore, the sub-sample analyses reveal that the adverse impact of board meetings on firm performance is particularly significant for both large and small firms, firms led by non-founder CEOs and/or chairs and firms with large and small board sizes. Interestingly, this study also finds that the performance of firms led by founder CEOs tends to improve with more frequent board meetings.
... where Dividendi,t is the dividend payout normalized by firm i's total assets at the end of year t (Ye et al., 2019;Hasan & Uddin, 2022). In robustness checks, we employ alternative measurements of dividend payout to re-estimate the relation between green credit policy and dividend payouts. ...
... Following prior dividend payout literature (Firth et al., 2016;Jiang et al., 2017;Ye et al., 2019;Hasan & Uddin, 2022), we include a set of control variables that have been identified to potentially affect dividend payouts. These variables include firm size (SIZE), financial leverage (LEV), the return on assets (ROA), cash holdings (CASH), the market-to-book ratio (MTB), stock return volatility (VOL), and ownership concentration (OWNCON). ...
We explore how polluting firms alter their dividend policy in response to pressure from green credit policy. The green credit guidelines that China adopted in 2012 aim to promote credit supply in sustainable development. Meanwhile, this green credit policy forced polluting firms to access restricted credit supply and tightened bank monitoring. Using the adoption of the green credit policy as a quasi-natural experiment, we find that polluting firms tend to lower their dividend payments, consistent with the view that dividends act as an effective tool of liquidity management and a substitute to mitigate agency problems. This finding is more pronounced among firms with weaker corporate governance, greater financial constraints, and more green innovation output. Our further analysis suggests that the green credit policy forces polluting firms to engage in less dividend smoothing.
... where Dividendi,t is the dividend payout normalized by firm i's total assets at the end of year t (Ye et al., 2019;Hasan & Uddin, 2022). In robustness checks, we employ alternative measurements of dividend payout to re-estimate the relation between green credit policy and dividend payouts. ...
... Following prior dividend payout literature (Firth et al., 2016;Jiang et al., 2017;Ye et al., 2019;Hasan & Uddin, 2022), we include a set of control variables that have been identified to potentially affect dividend payouts. These variables include firm size (SIZE), financial leverage (LEV), the return on assets (ROA), cash holdings (CASH), the market-to-book ratio (MTB), stock return volatility (VOL), and ownership concentration (OWNCON). ...
... In a social framework, diversity refers to the various characteristics of complex communities based on the biological, cultural, and cognitive differences between individuals (Goodman, 1975;Miller, 1990;Miller et al., 1998;Nehring & Puppe, 2002), while in an organizational context, diversity is associated with the cultural and demographic characteristics of the board, managers, and workforce (Bernile et al., 2018;Coffey & Wang, 1998;Fakoya & Nakeng, 2019;Harjoto et al., 2018;Kagzi & Guha, 2018b;Li & Chen, 2018;Lin et al., 2018;Siciliano, 1996). Board members with different characteristics and backgrounds enable greater independence in decision-making, leading to an improvement in management quality (Adusei, 2019;Aggarwal et al., 2019;Harjoto et al., 2018;Ye et al., 2019). The resource-based view argues that board diversity creates synergies and helps solve complex problems (Galbreath, 2005), while resource dependence theory underlines the role that corporate boards play in managing uncertainty in the external environment and gaining access to critical resources (Hillman et al., 2009;Pfeffer & Salancik, 2003). ...
... Board members also use their social skills to interact directly with external sources. This may also lead to a competitive advantage in achieving prosperity and thus, increasing strategic flexibility (Adusei, 2019;Aggarwal et al., 2019;Harjoto et al., 2018;Wright, 1995;Ye et al., 2019). ...
This study examines the effects of gender and cultural diversity of boards on the corporate governance and social performance of 373 companies listed in 24 emerging country markets over the period of 2010–2019 using panel data analysis. A two-step system GMM model is also applied to test the endogeneity problem. The results indicate that gender and cultural diversity positively affect corporate governance performance. While we note that social performance is positively associated with both gender and cultural diversity, this relationship is insignificant. The findings offer multidimensional insights for companies, policy makers, and stakeholders to promote the association between gender and cultural diversity initiatives and corporate sustainability dimensions in emerging markets.
... The resource dependence theory posits that female CEOs contribute diverse knowledge, relationship, and mindset resources, thereby mitigating the resource deficiencies often observed in top management teams comprised solely of male executives (Zhang et al., 2016). Female CEOs frequently introduce alternative viewpoints, fostering discussions that yield innovative and creative solutions to complex challenges (Ye et al., 2019). Women tend to demonstrate heightened emotional maturity (Wani & Masih, 2015), adeptness in multitasking (Ruderman et al., 2002), and a propensity for risk aversion (Farag & Mallin, 2018) compared to men. ...
... Faccio et al. (2016) take the percentage of a firm's peers with a female CEO as the instrumental variable for firm CEOs. Meanwhile, Ye et al. (2019) use the industry mean of female directors as an instrument variable. Following those studies, we believe that IMF is suitable for this paper's instrument. ...
Plain language summary
Foreign experienced chief financial officer and firm reporting quality
Purpose – This paper aims to empirically examine whether foreign experienced CFOs (FCFOs) affect financial reporting quality (FRQ). Design/methodology/approach – Analyzing Chinese listed firms from 2005 to 2018, this study employs methods such as ordinary least square, fixed effect model (FEM), generalized method of moment (GMM), two-stage least square (2SLS), propensity score matching method (PSM), and change analysis to find the relationship between FCFOs and FRQ. Findings – The results show that FCFOs significantly positively impact FRQ, which means that FCFOs improve FRQ in Chinese firms. We argue that international experience imprints CFO cognition, elevates his moral standards, and makes him more transparent in dealings, leading to a better information environment and robust corporate governance mechanism. In addition, this study indicates that the relationship between FCFOs and FRQ is significant in non-state-owned enterprises (NSOEs), suggesting that NSOEs outperform state-owned enterprises (SOEs) in terms of FRQ. Finally, we find that both foreign work and study experiences of CFOs affect FRQ. Practical implications – The findings suggest that asymmetric information problems can be alleviated by encouraging foreign experienced individuals to the firm’s CFO position. Originality/value – The study provides empirical evidence that a CFO’s foreign experience determines a firm’s FRQ.
... Interestingly, they also found that larger female presence in the board leads to smaller long-term excess returns after repurchases. Similar results have been reported by Ye et al. (2019) as well. It has also been found that level of repurchases is sensitive to the CEO's risk preferences and that less risky CEOs are more likely to prefer dividends over repurchases (Anilov & Ivashkovskaya,2020). ...
Since the early 1980s in the United States and the early 1990s in Europe and Asia, there has been a notable surge in the volume and frequency of share repurchases by companies. There are many different types of repurchases such as open-market repurchases, repurchase tender offers, privately negotiated repurchases, and accelerated share repurchases. Prior Research on share repurchases has identified many different motivations identified in prior literature, such as undervaluation, tax advantages, flexibility, takeover defense, and optimal capital structure. In addition, prior research has identified a number of organizational characteristics that can cause a firm to repurchase their shares such as the compensation structure of the executives, managerial characteristics, and managerial entrenchment. A large number of empirical studies have investigated the factors that motivate repurchases and implications of repurchases for stockholders, creditors, executives, and the economy in general. The results of these studies suggest that any generalizations about the benefits of repurchases may be inappropriate and that both the positive and negative effects may be context specific. Stock buybacks are becoming common in countries other than the United States. Empirical research on repurchases in different countries suggests that the motivations, incentives, and effects of repurchases may vary based on not only firm-specific factors but also country-level institutional conditions. We identify several avenues for future research such as the potential for principal–principal conflicts, the implications of governance characteristics for repurchase decisions, different executions strategies, and application of new methodological tools.
... They assume less debt, make less risky investment choices, but try to promote technical efficiency (Adusei 2019;Bui et al. 2019;Faccio et al. 2016). Women's representation on the BD facilitates corporate governance and promotes dividend payment (Chen et al. 2017;Ye et al. 2019). Generally, women holding CEO positions receive more remuneration than men (Canil et al. 2019), but remuneration packages are not designed based on the propensity to assume higher or lower levels of risk (Khan and Vieito 2013). ...
This paper aims to review the literature on gender diversity on top management teams and its impact on firm’s performance and audit quality. Over the period of 1997–2023 a total of 125 published articles were identified. Main findings reveal that literature on gender diversity continues to be contradictory, inconsistent and inconclusive regarding its impacts on firm’s performance and audit quality, highlighting the need to intensify research on this field to validate empirically those relationships. The literature review informs researchers on other audiences about the main characteristics of the literature on gender diversity and identifies several research gaps in the area.
... According to Karim (2021), incorporating female representatives on the board can improve communication across different levels of the firm and among board members. Furthermore, women on the board invariably have many opposing viewpoints, which can contribute to more salient discussions regarding important board decisions (Terjesen et al. 2009;Ye et al. 2019). Further, female directors are better connected with monitoring functions (Adams and Ferreira 2009). ...
This study investigates the interaction between ownership structures and female representation on the boards of directors in firms in Palestine, an emerging country with a very unstable political and economic setting. Using substitution and complementary hypotheses, the researchers examined a sample of 252 firm-year observations listed on the Palestine Exchange (PEX) for the period from 2013 to 2021. Both the baseline and robustness test findings show that the ownership structure appears to be inversely associated with board gender diversity (BGD), lending support to the hypothesis that gender diversity and ownership structure can be substituted for one another. These findings support the substitution hypothesis that when a small number of investors own a substantial proportion of shares in firms, allowing them to directly or indirectly exercise control and provide oversight of these firms’ management teams, it will be less necessary to rely on the monitoring role of the board (including women representation) to force managers to comply with their mandates, as those few blockholders can do so on their own.
... At low level of debt to equity ratio, the relationship between board gender diversity and dividend policy is significant since females naturally prefer low risks to safeguard the interest of shareholders. Other study also point to a positive relation between board gender diversity and dividend payments (Ye et al., 2019). They find boards with a higher ratio of female directors have higher dividend payouts, some study suggest to found a negative effect of gender diversity and dividend pay-out (Elmagrhi et al., 2017). ...
The study investigates the effect of corporate board attribute on dividend payout. This study covers all the listed conglomerate firms on the Nigerian stock exchange (as at 2021) and the secondary method of Data collection is used to obtain the annual report of the firms on the stock exchange website, the study covers a 10 years period (2011-2020). The result shows that impact of board size on firm dividend payout is negative and significant at 10%, board composition is positively and insignificantly related to firm dividend payout, board gender diversity is positively and insignificantly related to firm dividend payout, Finally, the result show that Board Meetings (BM) has insignificant and negative impact on firm dividend payout of listed conglomerate companies in Nigeria. It was recommended that government should unify code of corporate governance in to a single document, establishment of a unit within an organization to enforce adherence of corporate codes of ethics, stiff penalties to defaulters and establishment of chartered institute by government for the training of corporate members will go a long way in improving corporate governance practice in corporate organisations.
... 2.2 Hypothesis development 2.2.1 Female directors and corporate financial distress. A number of studies exist on the impact of female directors on several corporate outcomes, such as dividend payments (Ye et al., 2019), investment efficiency (Farooq et al., 2022a, b;Saleh and Sun, 2021;Shin et al., 2020), litigation risk, failure risk and operational risk (Teod osio et al., 2021) and company performance and value (Aggarwal et al., 2019;Amin et al., 2022;Belaounia et al., 2020;Ðặng et al., 2020;Kılıç and Kuzey, 2016;Safiullah et al., 2022;Tahir et al., 2021;Terjesen et al., 2016), among others. ...
Purpose
As the benefit of gender diversity continues to receive significant attention, a holistic investigation of its effect on corporate financial distress (CFD) is lacking. Therefore, this study examines the effects of board gender diversity, measured in different forms, such as the presence and proportion of female directors, family-affiliated female directors and the chief executive officer (CEO) gender, on CFD in Pakistan. The study also investigates the interacting effects of family-controlled (20 and 50% family-owned) companies on the association between board gender diversity and CFD.
Design/methodology/approach
The study applied the pooled cross-sectional logistic regression model to examine the effect of board gender diversity (presence and proportion of female directors, family-affiliated female directors and CEO gender) on CFD through a sample of 285 non-financial companies in Pakistan over the period of 2006–2017.
Findings
The results reveal that gender diversity on boards is significantly and negatively associated with CFD in Pakistan. In addition, when family ownership is 50% or more, the interacting effect of family control is found to be significant, while gender effects remain negative. The results suggest that female directors contribute to the long-term viability of companies, especially family-owned companies. Female directors are also found to be more prevalent in family-owned companies compared to their non-family counterparts.
Research limitations/implications
The findings imply that female directors may efficiently manage and control all functions necessary to guarantee the company's long-term prosperity. Similarly, gender effects can outweigh the detrimental impact of family control when female directors are in reasonable numbers and of high quality in the boardroom.
Practical implications
The practical relevance of the findings is that female directors play a significant role on the corporate board. Thus, it is a wakeup call for Pakistani companies to recognize the critical role and uniqueness of women on the corporate ladder. Family companies can also galvanize on the uniqueness of women to improve their governance structure.
Originality/value
This study adds to the literature on the benefits of gender diversity in family and non-family-owned companies. Specifically, this study applied multiple measures of gender diversity and family control in a single study. In addition, the study was conducted in a country that is ranked as the second worst country in the Global Gender Gap Index 2022, implying that investigating this type of research would go a long way towards changing the minds of corporate executives and regulators about the critical role that women can play in the economy.
... Gallemore et al. (2014) illustrate that boards can successfully assess whether their firms' goals deliver value to all stakeholders. Several studies have been conducted to investigate the impact of board features on CSR (Amran et al., 2014;Farooq et al., 2022) and dividend policy (Chen et al., 2017;Ye et al., 2019). They all discovered, however, that the board of directors is effective in safeguarding shareholder interests through dividend payout and in responding to the interests of nonfinancial stakeholders by investing in CSR projects. ...
Purpose
This study aims to investigate the impact of dividend policy on a firm’s participation in corporate social responsibility (CSR)-related activities in the context of Pakistani firms. Furthermore, the role of the board governance mechanism in dividend policy-CSR is investigated.
Design/methodology/approach
The study’s sample consists of 115 nonfinancial Pakistan Stock Exchange-listed firms from 2010 to 2021. A multidimensional financial method is used to assess the firm’s CSR engagement, and dividend policy is assessed using the dividend payout ratio and dividend yield. The authors used the fixed effect model and the random effect model to fulfill the study’s objectives. Furthermore, the system-generalized method of moment estimation technique is used to test the robustness of the result. In addition, the authors perform reverse causality analysis and investigate the effect of financial constraints on the dividend policy–CSR relationship.
Findings
The authors find that dividend policy has a significant positive impact on CSR. The authors also find that dividend policy is significantly positively associated with components of CSR, i.e. donation, employee welfare and research and development. Furthermore, the authors find that the board governance mechanism strengthens this positive relationship between dividend policy and CSR.
Practical implications
The government and authorities must mandate or at least encourage enterprises to pay dividends as doing so not only keeps shareholders happy but also encourages firms to make CSR initiatives to balance stakeholders. Furthermore, the regulator should take steps to strengthen the board governance structure as it strengthens the positive dividend policy–CSR relationship.
Originality/value
Although little previous research has focused on the CSR-dividend policy link, the authors believe that this is the first study to look at the influence of dividend policy on CSR and the moderating impact of board governance mechanisms in an emerging country, namely, Pakistan.
... Organisational capital represents the knowledge, capabilities, and business processes that integrate human skills with physical capital to enhance organisational efficiency. On governance, Ye et al. (2019) find that higher board gender diversity facilitates better corporate governance and results in higher dividends. Similarly, Chen et al. (2017) find that companies with a larger fraction of female directors have higher dividend payouts. ...
Companies can change the composition of their capital structure by adding (issuing) or reducing (paying out) types of funding. In issues, cash is raised from providers of capital and their claim is increased accordingly. Conversely, payouts refer to those situations in which cash is paid to providers of capital and the value of their claim is reduced accordingly. Both issues and payouts compete with alternative uses of corporate cash, such as investments and building cash reserves.
The impact of environmental (E) and social (S) factors on financial issues and payouts is most obvious through their impact on business models and operations, which in turn affect risk, debt capacity, and cash flows, thereby affecting the degree to which companies can and want to payout cash or issue new capital. As for issues and payouts of E and S themselves, the question is if they exist at all. After all, issues and payouts concern changes in claims that involve cash transfers, but it is not clear what the equivalent of cash could be in E and S. Still, an integrated view on issues and payouts makes sense: given that E and S liabilities affect integrated leverage, they are likely to have implications for integrated payouts as well. The question then is: how to manage issues and payouts, financial in nature, when managing for long-term value? It calls for caution on payouts in the presence of significant liabilities on E or S.
... This condition makes women tend to avoid possible risks that give negative effects on the company or themselves. The study conducted by Ye et al., (2019) states that gender equality on the board of directors has a varied point of view and also can develop their ability to face more complex problems. Previous studies have explained that gender diversity in the board of directors can provide new perceptions in decision-making and positively influence the effectiveness of corporate governance, innovation, and creativity (Amin & Sunarjanto, 2016;Conyon & He, 2017;Perryman et al., 2016). ...
Stock price crash risk in a company can be caused by corporate governance. Most studies report the main factor of the stock price crash risk is the tendency of management to hold bad news from investors or the public. This study aims to analyze whether the gender differences in the CFO factor, gender diversity, and also the number of boards of directors contribute to information transparency. The method used in this research is the Fixed Effects Model to reduce the problem of endogeneity. The research used a sample of listed companies in Indonesia on the Indonesia Stock Exchange's mains board during the 2019-2021 period. The results showed that the gender of the CFO and the number on the board of directors has a positive impact on the stock price crash risk. While the variable of gender diversity showed a negative impact on the dependent variable.
... , the announcement of dividends (or change in dividends)(Al-Yahyaee et al., 2011;Andres et al., 2013;Li and Lie, 2006;Nissim and Ziv, 2001;Wang et al., 1993), dividend payments(De Jong et al., 2003;Fenn and Liang, 2001;Ferris et al., 2009;He et al., 2017), gender diversity(García-Meca et al., 2022;Trinh et al., 2021;Ye et al., 2019) as well as theories of dividend policies ...
This study systematically reviews the dividend policy literature, combining quantitative and qualitative techniques. We screened a sample of 270 articles retrieved from the Scopus database
from 1981 to 2022. We contribute to the literature by identifying six research streams based on bibliometric co-citation analysis: (1) Dividend payment practices, (2) Price–dividend relationship,
(3) Capital market valuation, and dividend policy, (4) Risk governance and dividend policy, (5) Taxes and dividend policy, and (6) The dividend disconnects and catering incentives. For each of these streams, the central research theme is outlined, allowing us to recommend potential directions for further investigation. We provide influential journals, authors, topics, articles, and institutions from our analyses. We also contribute 77 research questions that can be explored in future research to develop the field of dividend policy. Our findings should be of value to academics, financial executives, policymakers, investors, and other practitioners.
... One reason for this impact is based on the assumption that gender diversity leads to more stringent monitoring by the board. Prior literature highlights three major reasons for improved monitoring by gender-diverse boards (Gul et al., 2011;Ittonen et al., 2010;Pucheta-Martinez & Bel-Oms, 2016;Ye et al., 2019). First, the differences in psychological and cognitive characteristics between males and females may lead to stringent monitoring by boards with a higher proportion of female board members. ...
The paper uses the data on 1212 microfinance institutions in 106 developing countries to document the impact of gender diversity on boards and gender diversity among borrowers on nonperforming loans (NPLs) during the period 2010–2018. The results show that microfinance institutions with a higher proportion of female borrowers have fewer NPLs than otherwise similar microfinance institutions with a lower proportion of female borrowers. Regarding female board members, the results show no relationship between the proportion of female board members and NPLs. The findings remain qualitatively the same after several sensitivity checks. We also show that characteristics specific to microfinance institutions moderate the relationship between gender diversity and NPLs.
... Companies with gender-diverse boards make fewer mistakes in financial reporting and experience fewer business scams [16]. Additionally, institutional ownership is linked favorably to board gender diversity, and when female senior executives own shares, corporate dividend payments rise [17]. Additionally, research shows a link between female company leaders and corporate social responsibility (CSR), which is supported in a number of domains, such as better governance, broader community participation, increased environmental awareness, superior innovation, and improved diversity [18]. ...
... Penelitian ini menggunakan variabel kontrol mengikuti penelitian sebelumnya seperti Waheed et.al Ukuran perusahaan diukur dengan logaritma natural dari total aset perusahaan. Ye et al. (2019) menyatakan bahwa perusahaan besar biasanya memiliki laba bersih yang lebih besar daripada perusahaan kecil yang dipertimbangkan mempengaruhi kinerja perusahaan. Selain itu, penelitian ini memasukkan leverage sebagai variabel kontrol yang diukur dengan rasio total hutang dibagi dengan total aset. ...
The purpose of this paper is to extend the literature and understanding about interactive ties creating firm performance through board gender diversity and ownership concentration. Therefore, we examined the influence of board gender diversity and ownership concentration on firm performance in the context of emerging economies. We use 103 firms from ASEAN countries, including Indonesia, Malaysia, the Philippines, and Thailand. The data representing all industries except the financial industry were examined with the period of ten financial yearsfrom 2010-2019. We examined unbalanced panel data with fixed effect specifications for baseline model. The empirical results are thatwomen’s presence and ownership concentration positively influences firm performance. It was suggesting that women’s presence and concentrated ownership is better equipped to discipline and motivate the management with theirresource base,whereas dispersed ownership magnifiesthe problemof managerial opportunism in the firms.
... 11 Consistent with prior studies (Martínez-García et al., 2022;Ye et al., 2019), we utilize the first lag and sector average values of the main independent variables as instruments. Following these studies, we rely on these instruments, as they are unlikely to be correlated with the error term and may not directly affect the dependent va ria bles. ...
We examine the interrelationships among board sustainability committees, process-based climate change initiatives, outcome-based carbon performance, and market value through the lens of economic-and social-based theoretical perspectives. Using a panel dataset of 8,408 observations from 35 countries between 2002 and 2019, we find that higher levels of actual greenhouse gas (GHG) emissions are negatively associated with market value. Further, we reveal a positive association between process-based climate change initiatives and market value. We then provide evidence that process-based climate change initiatives are positively related to increased levels of GHG emissions. We also observe that the presence of a board sustainability committee has a positive impact on market value, but does not seem to improve outcome-based carbon performance. Finally, we show that the predicted relationships vary across different country-groups, sector-groups, and periods. Our empirical findings are robust to alternative measures, endogeneities, and sample selection bias. Overall, our evidence supports the symbolic legitimation/greenwashing view in that firms are likely to employ process-based climate change initiatives under a symbolic approach to create positive impressions among stakeholders and protect their legitimacy.
... The board's gender composition has the potential to affect board decisions (e.g. Ye et al., 2019), and we evaluate its association with negative annual report tone. ...
Purpose
Negative disclosure tone in 10-K annual reports has economic consequences, yet relatively little is known about how it is generated. Boards of directors play an important governance role with respect to mandatory disclosures and personally sign off on Form 10-K, leading us to expect directors to influence financial reporting narratives. This study investigates whether the negative tone of firms' narrative annual report disclosures is associated with the human and social capital of its board of directors.
Design/methodology/approach
Multivariate regression analyses of negative disclosure tone (Loughran and McDonald, 2011) on board members' average age, gender, education, financial expertise and turnover is performed. A host of supplemental tests to corroborate our primary analysis, including using Sarbanes-Oxley's financial expert mandate as an exogenous shock to board composition, impact threshold for a confounding variable, placebo analysis, portfolio tests of more and less negative disclosing firms and portfolio tests of “loud” versus “quiet” boards are conducted.
Findings
Evidence that directors' gender, education, financial expertise and board turnover are associated with more negative disclosure tone, while directors' age is associated with less negative disclosure tone is found. The study also looked within the board to differentiate whether these findings are driven by characteristics of inside directors or outside directors serving on the audit committee, or both, as these are the specific groups of directors we would expect to play a role in disclosure. It was found that negative disclosure tone is associated with a lower bid-ask spread, so this study interpreted more negative tone as containing more descriptive information.
Originality/value
This study helps decode the “black box” of annual report disclosure tone, which Loughran and McDonald (2011) show has important economic implications. The results help inform stakeholders such as policymakers, executives and capital market participants as to how board member traits are associated with disclosure. The findings are particularly important as this study bears witness to the increasing prominence of gender/diversity mandates (e.g. Israel, Norway, California) and financial expertise mandates (e.g. Sarbanes-Oxley).
... The determinants of corporate dividend policies have attracted signi cant interest in prior literature (Miller and Rock, 1985 They report signi cantly higher dividend payout ratios during the years characterized by high political uncertainty. In contrast, Ye et al. (2019) document the importance of rm-speci c characteristics by reporting signi cantly higher dividend payout ratios for rms with greater gender diversity in their boards. This strand of literature argues that rm-speci c characteristics and countryspeci c characteristics determine the information asymmetries embedded in the working of rms and rms set their dividend policies in response to these information asymmetries. ...
The aim of this paper is to document the effect of advertising expenditures on the dividend policies adopted by non-financial firms from India firms during the period between 2000 and 2019. Our results show that advertising expenditures have a significantly positive impact on dividend payout ratios. Our results are robust across various proxies of advertising expenditures and dividend policies. These results are consistent with the argument that advertising expenditures improve the information environment of firms by increasing their visibility among stock market participants. Superior information environment makes expropriation technology expensive and leads to greater sharing of corporate profits. Furthermore, our findings also show that dividend payouts are more valuable for firms that incur low advertising expenditures. It indicates that dividend payouts improve firm value more when information environment is opaque.
... Firm characteristic Size and Lev are described below, and Cov is dummy to control impact of the pandemic. Calculations regarding Lev, Size and ROA are all consistent with those used byAlam et al. (2020), and dividends calculation is in line withYe et al. (2019). ...
In this research our aims to provide further evidence in the research area behind the effects of gender diversity in the board room. The empirical consensus is gender diversity increases a firm’s financial performance, and greater financial performance increases dividends and stock price. This research will provide evidence for the direct link between the two. We used FTSE 100 companies across the period 2011-2020. Data analysis shows that FTSE 100 found no relationship between gender and dividends, of 0.01% statistical significance, no relationship or statistical significance between gender and return, and a weak positive correlation of 0.015 statistical significance between gender and EPS. This therefore drawn to the conclusion of given its establishment, constituents of the FTSE 100 are subject to foreseeable levels of performance and profits. Given their size and lack of volatility at that sector of the stock market, that alteration of gender diversity at board level will result in a change in dividend or stock returns and is more likely to be due to more operational aspects of the companies.
Tax avoidance (TA) denotes to using tax bylaws in a way that is not envisioned by the government (Hoseini et al., 2019). It is a technique of evading tax or lessening the sum of tax that should be paid (Hoseini et al., 2019). The present study aimed to attain an understanding on whether board attributes (BODATBTs) impact the extent of TA amongst Bangladeshi listed corporations. The research also aimed to offer further evidence which supports or discards preceding research outcomes in developed economies and to conclude whether the outcomes could be generalized in the context of an emerging economy like Bangladesh. The study has found that the interaction term BDS*BGD has positive significant consequence to corporate tax avoidance (CTA), and the interaction term BDI*BGD has negative significant consequence to CTA, thus board gender diversity (BGD) has moderating effect on the relationship of BDS and BDI with corporate tax avoidance.
Corporate tax avoidance has merged an important regulatory issue around the globe, where the issue seems to be more severe for developing countries like Pakistan due to poor regulatory and institutional controls. Literature on the determination of corporate tax avoidance highlights the role of board gender diversity to curtail corporate tax avoidance. Considering these notions, this study investigates whether board gender diversity could improve corporate tax avoidance or not. Considering data from 231 Shariah Compliant and 33 Non-Shariah Compliant firms for six years, this study find that board gender diversity has negative influence on the corporate tax avoidance for only Shariah Compliant firm in Pakistan, whereas variables of audit committee size, and board independence had a negative but weak influence on corporate tax avoidance in Non-Shariah Compliant firms of Pakistan. This study argues that improving gender diversity in the board of Shariah Compliant firms could force these firms to lower their tax avoidance.
The empirical literature on a one-tier board system has recently focused on busy directors, defined as directors holding multiple similar positions in more than one firm simultaneously. In the same spirit, this paper investigates the impact of busy commissioners (instead of busy directors) on firms' performance for the case of Indonesia, a country adopting a two-tier board system. We find that busy commissioners do not impact accounting performance but are negatively associated with market performance. The markets tend to react negatively to the presence of busy commissioners, while actually the firms are also not advantaged financially by their presence. Interestingly, we also find that Shariah-compliant firms tend to have better accounting performance but not with market performance. Our analysis further reveals that the negative impact of busy commissioners on market performance diminishes in non-Shariah-compliant firms. Perhaps, the different characteristics of Shariah-compliant and non-Shariah-compliant companies, wherein Shariah-compliant firms tend to restrict leverage and cash level, account for the results. These findings are robust across various regressions. This research calls on policymakers to enforce the regulation regarding commissioners to reduce its detrimental impact on performance. The regulators should also collaborate with relevant agencies to educate and promote the existence of Shariah-compliant firms in Indonesia.
This study aims to test the impact of corporate governance on dividend policy for a sample consisting of 22 French companies listed on the CAC40 index during the period 2012-2022. and to achieve the goal of the study, we relied panel data. The study found no statistically significant effect of the board's independence on the dividend distribution policy. However, it found a positive and statistically significant effect of CEO duality, gender diversity on the board, while foreign board members had a negative and statistically significant effect. The results also indicated a positive and statistically significant effect of control variables represented by earnings per share, company size, and leverage.
Numerous studies have explored the impact of information asymmetry on firms’ dividend policies. These studies
have generally focused on advanced capital markets and have provided conflicting evidence on the quality of the
information environment and dividend policy. Our paper, thus, tries to address this gap in current understanding
by examining the connection between asymmetric information and dividend payout policies and whether this
connection is moderated by corporate governance quality (CGQ) in an emerging economy, the United Arab Emirates
(UAE). Using a panel sample of non-financial firms traded on the UAE stock exchanges over the period from
2009 to 2022, we document that dividend payments are negatively influenced by information asymmetry problems.
We also document that the negative connection between information asymmetry and dividend policy is less
pronounced in firms with strong corporate governance systems, consistent with the conjecture that such firms
face lower agency and asymmetric information problems and hence pay higher dividends.
This chapter aims, firstly, to conduct a literature review on the agency theory, which is the core theory of corporate governance, and, secondly, to further strengthen the theory. It is the theory also used in many other fields such as politics, accounting, business, and law. The chapter starts a debate on the link between agency theory and stewardship theory. The literature review is based on peer-reviewed journal articles on the topic by reputable academics focused on agency theory, corporate governance, board characteristics, and ownership structure. The survey of the literature is based on the latest publications in recent years. The agency theory has been growing over time, as have its uses and applications in various fields. However, it has also been criticized for its shortcomings. The limitations it has brought forward have resulted in the stewardship theory addressing some of the shortcomings. The theory has great potential for growth and extension.
The study examined the influence of corporate board attributes on dividend policy decision in twelve Nigerian banks for the period 2009-2021. The independent variable, corporate board features, was surrogated by four attributes (board size, composition, gender diversity and meetings). Dividend per share served as a proxy for the dependent variable, dividend policy. Fixed effects least square regression model was adopted as the study's analytical instrument. Findings reveal that board size, board composition and board meetings have an inverse and significant relationship with dividend per share. The finding further indicates a direct and insignificant association between gender diversity and dividend per share. Overall, result provides empirical evidence in support of substitution hypothesis perspective of agency theory.
In this chapter, the impact of board gender diversity on overall firm risk was investigated. Drawing on Social Identity Theory, Upper Echelons Theory and Agency Theory, a hypothesis of a negative link between gender diversity on the board of directors and firm risk has been put forward. Using a panel data regression on a sample of large Tunisian companies listed on the Tunis Stock Exchange (BVMT) over the period 2016-2020, author was able to provide empirical evidences supporting the existence of a significant negative impact of the percentage of women on boards of directors on stock return volatility as global firm risk proxy.
This article aims to investigate the association between gender board diversity and the dividend payout policy of the firms listed on the Pakistan stock exchange. The study uses critical mass theoretical assumptions to explain this relationship. The study uses a sample of 300 non-financial firms listed on the Pakistan stock exchange for six years (2015–2020). The study employs regression diagnostics tests to check for Heteroscedasticity, Multicollinearity, and Serial Correlation problems. The random effects regression model was chosen using a series of steps to analyze the associations among variables. The results conclude that one woman on the corporate board is positively associated with dividend payout, while a negative relationship has been examined in firms with more than one woman on their board. The inclusion of women on the corporate board is critical to the firms, and the policymakers are suggested to restructure the regulatory codes regarding gender board diversity in Pakistan. This paper focuses precisely on critical mass theoretical lenses to observe the association between gender board diversity and dividend payout. Concluding the significant influence of women on corporate boards, the theoretical foundation is justified.
This paper examines the role played by strategic agility and gender diversity in enabling the creation of value for grand challenges (VCGCs) by small and medium‐sized enterprises originating from emerging markets (ESMEs). ESMEs face significant challenges due to the dynamic environments in which they operate and the limited support they receive from formal institutions. In such contexts, strategic agility enables ESMEs to drive VCGCs through responsible collaborative innovation. We further argue that gender diversity is an important boundary condition that influences the effect of strategic agility on VCGCs via responsible collaborative innovation. Utilizing 228 survey responses from ESMEs originating from the United Arab Emirates (UAE), our findings shed light on the vital role played by strategic agility in enhancing ESMEs’ VCGCs. Specifically, our findings indicate that responsible collaborative innovation acts as an important mediating mechanism between strategic agility and VCGCs. In addition, gender diversity emerges as an important moderating factor in that, in the presence of more heterogeneous senior management teams, the effect of strategic agility on VCGCs through the mediating mechanism of responsible collaborative innovation is higher. These findings contribute to the literature on dynamic capabilities, upper echelons, and grand challenges by providing important insights into the mechanisms and boundary conditions of VCGCs in the context of emerging market firms. This article is protected by copyright. All rights reserved.
استهدف البحث دراسة واختبار علاقة التنوع بين الجنسين في مجلس الإدارة وكل من تكلفة الاقتراض وتوزيعات الأرباح النقدية. وذلك باستخدام عينة من الشركات غير المالية المقيدة في بورصة الأوراق المالية المصرية عن الفترة من 2015 وحتى 2019م.
وأوضحت نتائج الدراسة ما يلي: أولًا؛ أن الشركات الأكثر تنوعًا بين الجنسين في مجلس الإدارة تتحمل تكلفة اقتراض أكبر، وتسدد توزيعات أرباح نقدية أكثر، حيث يؤثر كل من وجود مديرة واحدة على الأقل في مجلس الإدارة، وعدد ونسبة المديرات في مجلس الإدارة، وعدد ونسبة المديرات التنفيذيات في مجلس الإدارة إيجابًا ومعنويًا على كل من تكلفة الاقتراض وميل الشركة لدفع توزيعات أرباح نقدية ومستوى توزيعات الأرباح النقدية. ثانيًا؛ والأكثر أهمية، أن هناك كتلة حرجة من التنوع بين الجنسين في مجلس الإدارة مطلوبة لتحسين فعالية المجلس؛ حيث عندما زادت نسبة المديرات في مجلس الإدارة عن 40% انخفضت تكلفة الاقتراض، كما زاد ميل الشركات لدفع توزيعات أرباح نقدية. بينما عندما تراوحت نسبة المديرات في مجلس الإدارة بين 20% وحتى 40% زاد مستوى توزيعات الأرباح النقدية التي تدفعها الشركات. وتدعم هذه النتائج القرارات الأخيرة للهيئة العامة للرقابة المالية القاضية بألا تقل نسبة تمثيل المرأة في مجلس الإدارة عن 25% أو عضوتين على الأقل.
الكلمات المفتاحية: التنوع بين الجنسين في مجلس الإدارة، تكلفة الديون، وتوزيعات الأرباح النقدية، وحوكمة الشركات.
Purpose
This study aims to examine whether information asymmetry (IA) mediates the relationship between women directors and the cost of equity (COE). Specifically, this study posits that women directors tend to lower the COE through the channel of IA.
Design/methodology/approach
This study uses the US-listed firms’ data from 2002 to 2014, comprising 11,189 firm-year observations. This study measures the COE by aggregating the four unique market-based COE models and apply pooled ordinary least square to estimate our results.
Findings
This study documents that women directors are linked to IA, and that IA is linked to the COE. Furthermore, in the mediation test, IA fully mediates the relationship between women directors and the COE. This study's results also validate the critical mass hypothesis, as the IA shows full mediation between the critical mass of women directors and COE. This study also discusses the limitations and major implications of the results along with possible future directions.
Social implications
This study also supports the positive role of females in improvising the economic performance of the firms and supporting the sustainable development goals-5 (gender equality).
Originality/value
The originality of this study lies in its theoretical as well as empirical contributions. First, this study follows the line of inquiry of the mediation analysis, thereby contributing by examining whether the relationship between women directors and financial value, i.e. COE, is indirect. Second, in addition to ex post measures of the COE, this study used four ex ante unique market-based models to measure the COE. Most of the prior studies just rely on book-based measures or use a single market-based mode. Third, the findings contribute insights into how women directors add value and benefits firms.
The present study endeavours to perform a systematic review of the literature related to the impact of corporate governance on dividend policy in the last two decades. This study uses the systematic literature review process . 143 articles were identified initially and subsequently further narrowed down to 66 most relevant articles for the scope of this study. This paper critically examines the influential studies in the literature related to the impact of corporate governance on dividend policy. The literature review related to corporate governance is analysed from two broad perspectives i.e. (a)Impact of Shareholder protection on dividend pay-out and (b) Impact of Controlling stakeholders on dividend pay-out. Our findings are as follows. Firstly, a vast majority of studies have found a positive relationship between better corporate governance practice and higher dividend pay-out. Secondly, the study finds that the majority of the research has been done in the USA and Europe while limited studies have focussed on emerging markets. Finally, our reviews show that there is a dearth of studies that evaluate the impact of the structural changes in corporate governance in various emerging markets. This study contributes to the extant literature in several ways. It highlights the research gaps in this field and provides a potential agenda for academicians and research organizations for future research.
The aim of this study is to investigate the influence of corporate governance and ownership structure on the relationship of corporate sustainability performance and dividend policy by using a panel dataset of 79 non-financial companies listed on Borsa Istanbul 100 Index for the years 2014–2020. We employed the panel logit, probit and tobit regression models for the analysis. The results indicate that corporate governance and family ownership significantly and positively moderate the relationship between corporate sustainability performance and dividend policy, while concentrated ownership and institutional ownership do not play a significant moderating role on this relationship. The findings also show that firm-level corporate governance is associated with high dividend payments, suggesting that this institutional mechanism helps reduce agency problems and lead companies to allocate capital more efficiently. The findings provide valuable insights for companies in structuring sustainability activities and shaping dividend policies with regard to ownership structure. It also offers policy prescriptions in emerging markets in the area of corporate financing policies.
This paper investigates whether female independent directors are more likely to impose high dividend payouts. We find evidence that firms with a larger fraction of female directors on their board have greater dividend payouts. This finding is robust to alternative econometric specifications, and alternative measures of dividend payouts and female board representation. The positive effect of board gender composition on dividends remains when we employ propensity score matching, the instrumental variable approach, and difference-in-differences approach to address potential endogeneity concerns. Furthermore, we find that board gender composition significantly increases the dividend payout only for firms with weak governance, suggesting that female directors use dividend payouts as a governance device.
Do women and men behave differently in financial asset markets?
Our results from an asset market experiment show a marked gender
difference in producing speculative price bubbles. Mixed markets
show intermediate values, and a meta-analysis of 35 markets from
different studies confirms the inverse relationship between the magnitude
of price bubbles and the frequency of female traders in the
market. Women’s price forecasts also are significantly lower, even in
the first period. Implications for financial markets and experimental
methodology are discussed. (JEL D14, D81, G01, G11, J16)
Love, sex, and money are the most direct cues involved in the fundamental forms of mate preferences. These fundamental forms are not mutually exclusive but are interrelated. As a result, humans base their mate choices on multiple cues. In this study, 62 undergraduate women (M age = 20.4 yr., SD = 1.4) from China and Japan served as the participants. They performed a variation of the semantic priming task, in which they were instructed to decide by means of a key-press whether the target was human or non-human. The primes were images that portrayed potent evolutionary factors for mate preference (i.e., love, sex, and money), and the manipulation was based on whether the prime and target matched regarding gender, independent of the target decision task (human vs nonhuman). Participants gave faster responses to male targets than to female targets under priming. The results generally supported the evolutionary premises that assume mate preference is determined by fundamental forms of providing emotional (love), material (money), and fertility support (sex). The money priming effect was stronger in the Chinese women than in the Japanese women, suggesting that social context may influence mate preferences.
Little is known about the price firms pay for stock repurchases. Using a data set of all U.S. repurchases from 2004 to 2011, we compare the actual average price paid monthly in a repurchase with the average market price for the same stock over various horizons. We find that firms repurchase stock at a significantly lower price than the average market price in all sample years. Less frequent repurchasers, firms that repurchase when insiders buy on their own account, and firms that experience low stock returns prior to the repurchase obtain significantly lower prices. After controlling for risk factors, repurchasing firms earn positive returns. Infrequent repurchasers earn a significantly higher return up to three years following the actual repurchase.
This article analyses founding family influence on pay-out policies for Swiss listed firms over the period 2003-2010. We hypothesise that family firms have different incentives and characteristics that affect pay-out decisions and propose three possible explanations: agency theory, reputation building and family income needs. Our results show that founding family firms display significantly higher dividend pay-outs relative to companies with other ownership structures. We also examine specific family characteristics and document that the family stake, the active involvement and generation of the family play an important role for pay-out policies. Our findings appear to be consistent with the family income hypothesis and to some extent with reputational concerns.
This study examines the relationship between board gender diversity and corporate environmental violations. Drawing on gender socialization and diversity theories, greater female board representation and female chief executive officers (CEO) are expected to reduce the frequency of corporate environmental violations. Empirical evidence in this study shows that firms with greater board gender diversity are less often sued for environmental infringements. In contrast, CEO gender is linked to reduced environmental litigation only in firms with low female board representation. I explore the relationship between board gender diversity and improved corporate environmental policies as a mechanism to explain the reduced litigation frequency. The findings are robust to controlling for reverse causality, propensity score matching, subsample analyses, different variable definitions, alternative model specifications, and industry controls and adjustments. These findings provide important insights to investors, managers, and policymakers into the role of female leadership in public companies.
We hypothesize, and examine empirically, two types of association between organization capital and firm life cycle. Are firms with high organization capital more likely to be in a particular stage of their life cycle than firms with low organization capital? Are firms' transitions from one life cycle stage to another over time associated with how much they invest in organization capital? Our findings suggest that firms with high (low) organization capital are more likely to be in the introduction and decline (growth and maturity) stages. Our results also show that firms that invest more in organization capital (i.e., changes in organization capital) are less (more) likely to move to the introduction, shake-out and decline (growth and maturity) stages in the subsequent five years. Our results are robust to alternative specifications of organization capital, life cycle proxies and endogeneity concerns.
Using a large sample of US public companies, we find robust evidence that firms' payout policies, i.e., dividends and share repurchases, are significantly influenced by the policies of their industry peers. To overcome endogeneity problems, we employ instrumental variable techniques based on peers' stock price shocks. Peer influence on payouts is more pronounced among firms that face greater product market competition and operate in better information environments. With regards to dividends, firms, especially smaller and younger firms, are more sensitive to industry peers that are similar to them in size and age. However, mimicking repurchases is concentrated among large and mature firms only. Peer influence on dividends, compared to repurchases, seems more stable across firm and industry conditions. Overall, peer influence on dividends, and, to a less extent, on repurchases, is consistent with a rivalry-based theory of imitation, which posits that firms imitate peers' actions to maintain their competitive parity.
This study investigates the impact of excess cash on the liquidity risk faced by investors and their required liquidity premium. It shows that excess cash improves trading continuity and reduces both liquidity risk and the cost of equity capital. These findings are consistent with the view that firms with excess cash attract more traders even when market liquidity dries up. The increase in investors' trading propensity reduces stock price exposure to shocks to market liquidity and the liquidity premium required by investors. We also examine the impact of excess cash on firm value. We show that while the direct effect of excess cash on firm value is negative, its indirect effect through liquidity is significantly positive, indicating that investors are less likely to sanction (or even reward) illiquid firms for holding excess cash. Further analysis suggests that the liquidity benefits of excess cash are greater for financially constrained firms and firms with high growth opportunities. Our results are robust over time, after addressing endogeneity concerns, and to alternative estimation methods and alternative measures of liquidity.
This paper examines whether the motivation of institutional investors in monitoring a firm is positively related to the relative importance of the firm’s stock in their portfolios. We find that greater motivated monitoring institutional ownership is associated with a higher marginal value of corporate cash holdings, which cannot be explained by other corporate governance measures and institution types. Further, we find that the economic effect of institutional monitoring on the marginal value of cash falls with decreasing institutions’ monitoring motivation. Based on these findings, we construct a monitoring motivation-weighted institutional ownership measure and document a positive relation between it and the marginal value of cash. Our results are robust after controlling for the endogeneity of institutional ownership, three cash regimes, firm size, and changes in US public firms over time.
This study investigates whether and how institutional investors' site visits affect corporate innovation. Using all Chinese firms listed in the Shenzhen Stock Exchange from 2009 to 2013, we find that institutional investors' site visits significantly enhance corporate innovation and this effect is more pronounced for firms with a lower-quality information environment and poor corporate governance. We further find that the governance effect of site visits on innovation is consistent with career concerns rather than the quiet life hypothesis. We perform two stage-least square analysis to address possible endogeneity concerns and several robustness checks including using alternative measures of site visits and corporate innovation, alternative model specifications, and controlling for firm fixed effects. We also find that the effects of institutions' site visits are substitutes for the effects of institutional shareholding.
Using a unique Korean initial public offering bookbuilding dataset, this paper examines the impacts of presales to institutions and premarket interest on institutional bidding decisions and makes the following observations. First, there is no significant relationship between presales and bidding decisions. This is attributable to the fact that Korean underwriters offer institutions more allocations of less underpriced shares. Second, institutions become more willing to bid aggressively, as premarket interest increases. Third, institutional incentive to submit aggressive bids is positively related to underwriter pricing discretion. Fourth, bidding strategies are conditional on the different degrees of pricing discretion. Overall, this paper's evidence concludes the endogeneity of institutional bidding decisions in premarket auctions.
Using a novel insider trading and short selling dataset from the Hong Kong Stock Exchange (HKEx), we investigate potential information leakage from corporate insiders to short sellers, particularly in family firms. Even without the presence of market makers in the HKEx, we document a significant increase in short selling volume before insider trades are released to the public. The non-monotonic relationship between the short selling intensity and family control contributes to the debate on whether family presence facilitates or limits information leakage. In addition, trading by non-family insiders is more likely to convey private information, as compared to family insiders.
We find that board gender diversity increases the likelihood that firms announce a buyback but long-term excess returns are significantly smaller when there is larger female representation on the board. This is consistent with the governance hypothesis: gender diversity makes it more likely that firms buy back stock to reduce agency costs of free cash flow. But because gender diversity improves the quality of public information disclosure repurchases are less driven by market timing. Moreover, when the quality of monitoring is lower because board members sit on many other boards, long-term excess returns are larger.
Over a period that includes the 1998 Russian crisis and 2007–2009 financial crisis,banks with overconfident chief executive officers (CEOs) were more likely to weaken lending standards and increase leverage than other banksin advance of a crisis,making them more vulnerable to the shock of the crisis.During crisis years, they generally experienced more increases in loan defaults, greater drops in operating and stock return performance, greater increases in expected default probability, and higher likelihood of CEO turnover or failure than other banks.CEO overconfidence thus canexplain the cross-sectional heterogeneity in risk-taking behavior among banks.
Employing a sample of 4271 initial-industry acquisitions across 34 countries from 1989 to 2013, we show that the rival firms which are in the same industry as the target firms exhibit positive cumulative abnormal returns (CARs). In addition, those rivals with higher analyst coverage are associated with higher CARs. The results are robust to the natural experiment based on the exogenous decrease in analyst coverage (i.e., brokerage closure and merger). Careful comparisons of the results show dramatic differences between the United States (U.S.) and non-U.S. subsamples. We further show that a more transparent macro information environment can substitute for the role of financial analysts in determining the rival response. Overall, our findings support the Acquisition Probability Hypothesis.
Motivated by the pioneering study of Morck, Yeung, and Yu (2000), this paper investigates whether and how news commonality varies according to a country׳s institutional environments. Using a unique global news data set across 41 countries for the 2000–2009 period, we document three notable findings. First, firm-level news comoves more in countries with weaker institutional environments than in those with stronger institutional environments. Second, news commonality is positively associated with both stock return comovement and stock liquidity commonality. Third, the effect of news commonality on stock return and liquidity comovement is higher in countries with stronger institutions than in those with weaker institutions. These results suggest that a country׳s institutional environments affect firm-specific information production and, more importantly, support the information-efficiency view that lower price synchronicity is caused by greater capitalization of firm-specific information.
We formulate theory and set forth a first-ever empirical analysis of the impact of board of director gender diversity on the broad spectrum of securities fraud, generating three main insights. First, the examined data show strong evidence consistent with the view that the importance of women on boards in mitigating securities fraud lies in the mechanism of diversity itself, such that the optimal percentage of women on boards is 50% with respect to minimizing securities fraud. We find less direct support for the alternative proposition that women are more ethically sensitive and less likely to risk committing fraud, such that the optimal percentage of women on boards would be 100% with respect to mitigating securities fraud. Second, we show that the market response to fraud from a more gender-diverse board is significantly less pronounced. Third, we show that women are more effective in mitigating both the presence and severity of fraud in male-dominated industries, which again supports the notion of diversity. All our findings are robust to controls for endogeneity and propensity score matching, among other robustness checks.
We document significant reductions in corporate payouts-both dividends and (to a larger extent) share repurchases-during the 2008–2009 financial crisis. Payout reductions are more likely in firms with higher leverage, more valuable growth options, and lower cash balances, i.e., those more susceptible to the negative consequences of an external financing shock. Moreover, firms appear to use the proceeds from the reduction in payout to maintain cash levels and to fund investment. These findings are consistent with the view that a shock to the supply of credit (net of demand effects) during the financial crisis increased the marginal benefit of cash retention, leading some firms to turn to payout reductions as a substitute form of financing.
While there is extensive research on how option incentives in executive compensation relate to risk-taking by managers, the impact of capital structure on this relationship has received little empirical attention. Extant work suggests that heightened managerial career concerns arising from financial risk and monitoring by debt holders will result in leverage dampening the relationship between managerial risk-taking and equity-linked incentives. We empirically evaluate this contention and find that firm leverage is associated with a significant weakening of the positive relationship between option incentives in flow compensation and managerial risk-taking. This result holds after accounting for the endogeneity of the firm leverage and incentive compensation decisions, and is robust across alternative measures of managerial risk-taking and to using the firm’s credit ratings instead of leverage. The attenuating effect of firm leverage arises from both the long-term and short-term components of debt and is significantly stronger during the financial crisis of 2007-2009. Overall, the evidence highlights the influence of capital structure on the relationship between option incentives and managerial risk-taking.
We extend the literature on how managerial traits relate to corporate choices by documenting that firms run by female CEOs have lower leverage, less volatile earnings, and a higher chance of survival than otherwise similar firms run by male CEOs. Additionally, transitions from male to female CEOs (or vice versa) are associated with economically and statistically significant reductions (increases) in corporate risk-taking. The results are robust to controlling for the endogenous matching between firms and CEOs using a variety of econometric techniques. We further document that this risk-avoidance behavior appears to lead to distortions in the capital allocation process. These results potentially have important macroeconomic implications for long-term economic growth.
We show that gender diversity in corporate boards could improve firm value because of the contributions that women make to the board. Prior studies examine valuation effects of gender-diverse boards and reach mixed conclusions. To help resolve this conundrum, we consider how gender diversity could affect firm value, that is, what mechanisms could explain how female directors benefit corporate board performance. We hypothesize and provide evidence that women directors contribute to boards by offering specific functional expertise, often missing from corporate boards. The additional expertise increases board heterogeneity which Kim and Starks (2015) show can increase firm value.
We study the participation of women in golf, a predominately male social activity, and its influence on their likelihood of serving on a board of directors. Exploiting a novel dataset of all golfers in Singapore, we find that woman golfers enjoy a 54% higher likelihood of serving on a board relative to male golfers. A woman's probability of serving on the board in a large firm or in a predominately male industry increases by 117% to 125% when she plays golf. Joining the boy's informal network appears to facilitate women's entrance or success in the executive labor market.
Share prices generally fall when a firm announces a seasoned equity offering (SEO). A standard explanation is that an SEO
communicates negative information to investors. We show that if repeated capital market transactions are possible, this same
asymmetry of information between firms and investors implies that some firms also repurchase shares in equilibrium. A subset
of these firms directly profit from repurchases, while other firms repurchase in order to improve the terms of a subsequent
SEO. The possibility of repurchases reduces both SEOs and investment. Overall, our analysis highlights the importance of analyzing
SEOs and repurchases in a unified framework.
Received June 28, 2014; accepted September 14, 2015 by Editor David Hirshleifer.
We show that higher institutional ownership causes firms to pay more dividends. Our identification relies on a discontinuity
in ownership around Russell index thresholds. Our estimates indicate that a one-percentage-point increase in institutional
ownership causes a $7 million (8%) increase in dividends. We also find differences in shareholder proposals and voting patterns
that suggest that even nonactivist institutions play an important role in monitoring firm behavior. The effect of institutional
ownership on dividends is stronger for firms with higher expected agency costs.
Received December 5, 2014; accepted December 24, 2015 by Editor David Denis.
In this paper, we provide the first firm-level evidence on the importance of culture, and its interdependence with legal (formal) institutions in affecting firms' use of external financing to fund growth. We conjecture that culture, after controlling for its macro-economic impact through political and legal institutions, has a direct micro-economic effect on firm-level growth. Using an international sample of 42,341 firms from 56 countries over the period 1989 to 2012, we find support for our hypothesis that cultural dimensions of individualism, masculinity, uncertainty avoidance and power distance affect firm's ability to overcome financial constraints, with individualism exhibiting a strong robust impact compared to the other dimensions. We further find that the link between individualism and growth is stronger in countries with low access to finance, suggesting that firms' ability to overcome financial constraints is more affected by individualism when access to finance is lower.
We document that women are less represented on corporate boards in Finance and more traditional STEM industry sectors. Even after controlling for differences in firm and country characteristics, average diversity in these sectors is 24% lower than the mean. Our findings suggest that well-documented gender differences in STEM university enrolments and occupations have long-term consequences for female business leadership. The leadership gap in Finance and STEM may be difficult to eliminate using blanket boardroom diversity policies. Diversity policies are also likely to have a different impact on firms in these sectors than in non-STEM sectors.
Agency theory suggests that outside shareholders prefer higher dividend payouts in order to reduce the free cash flows of firms that are under the insiders’ control. Our study investigates the effects of mutual funds, typically the most important and influential type of outside shareholder, on firms’ dividend payouts in China during the period from 2003 to 2011. We find that mutual funds influence firms to pay higher cash dividends. The results are consistent with the predictions from exit theory. The effects are more pronounced in firms controlled by state and regional governments and in firms with relatively higher free cash flows. We also find evidence that the mutual funds’ effects are stronger when their investment horizon is longer and the ownership interest is larger. Other institutional investors, such as banks, insurance companies, and securities companies have a lower exit threat and do not have an influence on firms’ cash dividend payments or financial performances.
This paper analyzes how the impact of the global financial crisis on corporate investment varies across countries depending on the protection of creditor rights and bank market competition. Results for 8,546 publicly traded industrial firms in 34 countries indicate that stronger protection of creditor rights and stronger bank competition are associated with a greater reduction in corporate investment during the crisis. Differences in bank dependent firms suggest the relevance of both the demand and supply effects of the crisis. These findings indicate that creditor rights and bank competition affect not only the likelihood of a financial crisis but also the real effects of the crisis once it happens. The results are robust to alternative specifications and definitions of the crisis period, changes in the countries included in the sample, and alternative proxies for bank dependence, creditor rights, and bank market competition.
Using a survey of 800 Chief Executive Officers (CEOs) in 22 emerging economies, we show that CEOs' management styles and philosophies vary with the ownership and governance structure of their firms. Founders and CEOs of firms with greater family involvement display a greater stakeholder focus, and feel more accountable to employees and banks than to shareholders. They also have a more hierarchical management approach, and see their role as maintaining the status quo rather than bringing about change. In contrast, CEOs of non-family firms emphasize shareholder-value-maximization. Finally, firm-level variation in ownership is as important in explaining management philosophies as cross-country or industry-level differences.
In this paper we draw on recent progress in the theory of (1) property rights, (2) agency, and (3) finance to develop a theory of ownership structure for the firm.1 In addition to tying together elements of the theory of each of these three areas, our analysis casts new light on and has implications for a variety of issues in the professional and popular literature, such as the definition of the firm, the “separation of ownership and control,” the “social responsibility” of business, the definition of a “corporate objective function,” the determination of an optimal capital structure, the specification of the content of credit agreements, the theory of organizations, and the supply side of the completeness-of-markets problem.
Women are increasing in number among corporations' boards of directors, yet their representation is far from uniform across firms. In this study, we adopted a resource dependence theory lens to identify organizational predictors of women on boards. We tested our hypotheses using panel data from the 1,000 U.S. firms that were largest in terms of sales between 1990 and 2003. We found that organizational size, industry type, firm diversification strategy, and network effects (linkages to other boards with women directors) significantly impact the likelihood of female representation on boards of directors.
We examine the link between firms' stock repurchase activity and the presence of earnings per share (EPS) performance conditions in executive compensation contracts. Findings reveal a strong positive association between repurchases and EPS-contingent compensation arrangements. Further analysis suggests net benefits to shareholders from this association. Specifically, repurchasers experience larger increases in total payouts; the positive association between repurchases and cash performance is more pronounced for firms with EPS targets in the presence of surplus cash; undervalued firms with EPS targets are more likely to signal mispricing through a repurchase; and repurchasers with EPS conditions are associated with lower abnormal accruals. We find no evidence that EPS-driven repurchases impose costs on shareholders in the form of investment myopia.
We analyze the two-way relationship between share repurchases and liquidity based on a newly available data set of realized share repurchases in the US, which covers 50,204 repurchase months between 2004 and 2010. Repurchases unequivocally improve liquidity. Firms also adapt their buyback programs by reducing repurchase activity when the market for their stock is less liquid. Our findings suggest that endogenous controls have confounded results in earlier studies. Our results do not support the hypothesis that repurchases based on firms' privileged information reduce liquidity because of adverse selection.
This paper examines whether cultural dimensions explain the variation in corporate cash holdings around the world as well as within the United States. We establish four major findings. First, in an international setting, corporate cash holdings are negatively associated with individualism and positively associated with uncertainty-avoidance. Second, individualism and uncertainty avoidance influence the precautionary motive for holding cash. Third, firms in individualistic states in the United States hold less cash than firms in collectivistic states. Fourth, we show that individualism is positively related to the firm’s capital expenditures, acquisitions, and repurchases while uncertainty avoidance is negatively related. Our findings remain unchanged after controlling for governance factors, firm attributes, and country characteristics.
Consistent with predictions from the psychology literature, we find that stock prices co-move more (less) in culturally tight (loose) and collectivistic (individualistic) countries. Culture influences stock price synchronicity by affecting correlations in investors' trading activities and a country's information environment. Both market-wide and firm-specific variations are lower in tighter cultures. Individualism is mostly associated with higher firm-specific variations. Trade and financial openness weakens the effect of domestic culture on stock price comovements. These results hold for various robustness checks. Our study suggests that culture is an important omitted variable in the literature that investigates cross-country differences in stock price comovements.
We investigate whether the gender composition of teams affects their economic performance. We study a large business game, played in groups of three, in which each group takes the role of a general manager. There are two parallel competitions, one involving undergraduates and the other involving MBA students. Our analysis shows that teams formed by three women are significantly outperformed by all other gender combinations, both at the undergraduate and MBA levels. Looking across the performance distribution, we find that for undergraduates, three-women teams are outperformed throughout, but by as much as 0.47 of a standard deviation of the mean at the bottom and by only 0.09 at the top. For MBA students, at the top, the best performing group is two men and one woman. The differences in performance are explained by differences in decision making. We observe that three-women teams are less aggressive in their pricing strategies, invest less in research and development, and invest more in social sustainability initiatives than does any other gender combination.
This paper was accepted by Brad Barber, Teck Ho, and Terrance Odean, special issue editors.
This paper examines the effect of board gender diversity on firm performance in China's listed firms from 1999 to 2011. We document a positive and significant relation between board gender diversity and firm performance. Female executive directors have a stronger positive effect on firm performance than female independent directors, indicating that the executive effect outweighs the monitoring effect. Moreover, boards with three or more female directors have a stronger impact on firm performance than boards with two or fewer female directors, consistent with the critical mass theory. Finally, we find that the impact of female directors on firm performance is significant in legal person-controlled firms but insignificant in state-controlled firms. This paper sheds new light on China's boardroom dynamics. As governments increasingly contemplate board gender diversity policies, our study offers useful empirical guidance to Chinese regulators on the issue.
We examine whether cultural differences between countries help explaining firms’ hedging decisions. For this, we manually collect data on the hedging behavior of worldwide energy utilities. The analysis reveals a strong impact of a country’s long-term orientation, which reduces the probability for hedging and the hedged volume. The only other factor with a consistently higher economic impact is firm size. Furthermore, hedging with options is less common in countries with a high level of masculinity. Overall, the results reveal that culture has a strong impact on the hedging behavior of firms. This influence is not captured by other country-specific factors such as economic development or the legal framework.
In this paper, we examine the role of national culture in corporate takeover decisions, by arguing that managerial risk tolerance (a combination of risk aversion and risk perception), at the national level, is a cultural trait and affects the expected net synergies CEOs require. We propose a theoretical framework that links CEO risk tolerance to the expected net synergies. We empirically show that CEOs of firms located in countries with lower levels of risk tolerance, measured by Hofstede’s (1980, 2001) uncertainty avoidance score, require higher premiums on takeovers, and show that uncertainty avoidance plays a greater role in relatively large takeovers. Additional testing reveals that CEOs from high uncertainty avoiding nations engage less in cross-border/cross-industry takeovers, suggesting that uncertainty avoidance captures more the CEO’s risk perception than his/her risk aversion.
Norway is the first, and so far only, country to mandate a minimum fraction of female and male directors on corporate boards. We find that after a new gender balance law surprisingly stipulated that the firm must be liquidated unless at least 40% of its directors are of each gender, half the firms exit to an organizational form not exposed to the law. This response suggests that forced gender balance is costly. These costs are also firm-specific, because exit is more common when the firm is non-listed, successful, small, young, has powerful owners, no dominating family owner, and few female directors. These characteristics reflect high costs of involuntary board restructuring and low costs of abandoning the exposed organizational form. Correspondingly, certain unexposed firms hesitate to become exposed. Overall, we find that mandatory gender balance may produce firms with either inefficient organizational forms or inefficient boards.
Both stock price synchronicity and crash risk are negatively related to the firm’s ownership by dedicated institutional investors, which have strong incentive to monitor due to their large stake holdings and long investment horizons. In contrast, the relations become positive for transient institutional investors as they tend to trade rather than monitor. These findings suggest that institutional monitoring limits managers’ extraction of the firm’s cash flows, which reduces the firm-specific risk absorbed by managers, thereby leading to a lower R2. Moreover, institutional monitoring mitigates managerial bad-news hoarding, which results in a stock price crash when the accumulated bad news is finally released.
We study how firms manage the exogenous shock to the supply of credit during the financial crisis of 2008-2009 by examining their changes in corporate payout, cash holdings, and investments. Rising financing frictions and costs increase the marginal benefit of cash retention, causing firms to reallocate funds that would otherwise be distributed to shareholders. We find that firms with greater financial constraints and are more dependent on external capital, i.e., high leverage and low cash balances, are more likely to cut their payout to the shareholders during the financial crisis. We observe that the most commonly stated reason for payout reduction is to improve liquidity/cash balance. Firms use the proceeds from the reduction in payout to maintain cash levels and fund investments. If firms had not reduced their payout, they would have been operating at a below- normal cash level. Firms cutting dividends mainly use the funds to boost working capital, while firms reducing repurchases mainly use the cash saved to fund investments. Compared to firms who paid out during the crisis, the matched non-paying firms are able to conduct more investments during the crisis. Our results demonstrate that firms quickly alter their payout policy when the supply of external capital is subject to an adverse shock.
This paper examines the relation between a borrowing firm's ownership structure and its choice of debt source using a novel, hand-collected data set on corporate ownership, control and debt structures for 9,831 firms in 20 countries from 2001 to 2010. We find that the divergence between control rights and cash-flow rights of a borrowing firm's largest ultimate owner has a significant impact on the firm's choice between bank debt and public debt. A one-standard-deviation increase in the divergence reduces the borrowing firm's reliance on bank debt financing as measured by the ratio of bank debt to total debt by approximately 23% and increases its reliance on public debt financing as measured by the ratio of public debt to total debt by approximately 18%. The effect of the control-ownership divergence on borrowing firms' debt choice is more pronounced for firms with high financial distress risk, firms that are informationally opaque, and firms that are family-controlled. Moreover, this effect is weakened by the presence of multiple large owners and in countries with strong shareholder rights. Overall, our results are consistent with the hypothesis that firms controlled by large shareholders with excess control rights choose public debt financing over bank debt as a way of avoiding scrutiny and insulating themselves from bank monitoring.
This paper examines the relation between business group affiliation and the cost of debt capital. The co-insurance effect associated with business groups can reduce the cost of debt, while the expropriation by controlling shareholders can raise the cost of debt. We find that firms affiliated with major Korean business groups (i.e., chaebols) enjoy a substantially lower cost of public debt than do independent firms, consistent with the co-insurance argument. We also find that the effect of group affiliation on the cost of debt is stronger for firms with poor credit quality and with opaque financial statements, and when the economy is in downturns. These findings are consistent with the notion that the value of co-insurance increases with the uncertainty about the future payoffs of debtholders. Our study highlights that the role of business groups is distinct from and incremental to the role of ownership structure in the debt market.
This paper examines the effect of earnings management on financial leverage and how this relation is influenced by institutional environments by employing a large panel of 25,798 firms across 37 countries spanning the years 1989 to 2009. We find that firms with high earnings management activities are associated with high corporate leverage. More importantly, this positive relation is attenuated by strong institutional environments. Our results lend strong support to the notions that (1) both corporate debt and institutional environments can be served as external control mechanisms to alleviate the agency cost of free cash flow; and (2) it is less costly to rely on institutional environments than debt. Various robustness tests confirm our main conclusions.