What is it about?
This study attempts to determine whether gender diversity on the firm's board affects the dividend payout ratio concerning firms listed on Nifty 50 in India. It was found that there exists a positive association between the percentage of female directors and the dividend payout ratio. Results also found that there is a positive impact of the number of female directors on the dividend to total assets. This implies that gender diversity on board positively affects the payout ratio of firms. This study is the first of its kind to investigate the association of gender diversity on the firm's board and dividend payout ratio.
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Why is it important?
Our study contributes to the theory on board diversity and dividend payout ratio by providing new understandings into the relationship of female representation on boards and the profit which is distributed to the shareholders. Historically, India has been a nation witnessing lower female directors on board; therefore, the government had to take measures to put a quota system for promoting female representation on board which indicated positive association with the percentage of profits distributed to the shareholders. This study has two considerations: (1) many companies are now very much adhering to corporate governance norms and (2) the issue of gender diversity on board is gaining importance worldwide.
Perspectives
India, being an emerging economy, differs in terms of institutional settings from other developed nations, and due to India's growth opportunities, world economies are looking toward India as a nation of investment opportunities. Regulators in India are making major amendments in Legislations to include women representation on the boards, and dividend payout is an area that has not been given much attention by the scholars, especially from the Indian perspective. Thus, this study is first of its kind is novel in its approach and will help future researchers. Gender diverse boards may provide a different perspective on various issues. Based on this study, the board with a higher proportion of female directors provide a higher payout ratio. It appears that the business environment in India pushes the board member to endorse aggressive policies in context to the dividend. Multiple regression analysis and the logit model have been employed. The dependent variable is the dividend payout policy of the firm, and the independent variable is gender diversity. The regression model incorporated control variables that have been popularly listed in the extant literature. The robustness of the results has also been tested.
Dr. Sahil Singh Jasrotia
International Management Institute
Read the Original
This page is a summary of: Does gender diversity on firm’s board affect dividend payouts? Evidence from India, Future Business Journal, July 2021, Springer Science + Business Media,
DOI: 10.1186/s43093-021-00070-z.
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