Characteristics of the Board of Directors and Dividend Policy: A Case Study of Banks in Western Balkans

Abstract

This paper examines the influence of the size and participation of women in the board of directors on the dividend policy of banks in Western Balkans. The research covered 104 banks, observing their dividend policy from 2017 to 2019. The dividend payout ratio was measured by the dividend policy. A relatively small number of banks paid dividends during the observation period. By applying the Fixed-Effect model, it was determined that the size of the board of directors has a statistically significant positive impact on the dividend policy of observed banks. Concerning the participation of women on the board of directors, a statistically significant impact on the dividend policy of banks was not identified. In addition to contributing to the existing literature on corporate finances, the research results can be crucial to investors when deciding to invest funds in bank stocks.

Characteristics Boards of Directors and Cash Dividend Policy

“…is greater than 0.05 which means that we shall reject the alternative hypothesis. This indicate that the no relation between Board women's representation and cash dividend policy in Palestine stock exchange This is consistent withMilašinović, et al (2023).…”

“…However, the independence had a strong negative impact as indicated that the presence of members with financial experience is one of the main factors affecting the distribution of cash dividends. Muhammad, (2021) showed that there is a positive effect of Board size and diversity and a negative one for women's representation, while Milašinović, et al (2023). Unlike women's representation, which did not have a statistically significant effect, In contrast to Zeitoun, ( 2022), where companies with more women's representation in the board of directors tend to pay a higher level of cash dividends.…”

Board Gender Diversity and Banks Profitability for Business Viability: Evidence from Serbia

“…The identification of factors that influence the profitability of a corporation is an important task that is put before the management and/or owners [1,2]. This becomes especially important during the emergence of different types of crises (examples of crises include the financial crisis of 2008 and the health crisis triggered by the COVID-19 pandemic) and in those sectors, such as financial, which are of vital importance for the operation of the entire economic system [3][4][5].…”

“…In modern business conditions, corporate governance, together with intellectual capital, is recognized as one of the main factors in the success of corporations, but also in overall economic growth and development [7,8]. The term corporate governance refers to a set of practices, procedures, and guidelines that are employed to oversee, manage, and regulate the functioning of a corporation [5,9,10]. In other words, it represents a system of control and monitoring of the work of managers by the board of directors in order to ensure the maximization of value for shareholders and other stakeholders.…”

“…The effectiveness and efficiency of the board of directors is influenced by its size and diversity of members (such as independence, gender, level of education, duality of the executive director, professionalism, etc.) [5,10,44,45].…”