ESG performance and dividend payout: A channel analysis

Bilyay-Erdogan, Seda; Danışman, Gamze Öztürk; Demir, Ender

doi:10.1016/j.frl.2023.103827

Cited by 32 publications

(24 citation statements)

References 26 publications

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“…In contrast, the "cost of equity channel" indicates a negative connection. A similar study by Bilyay-Erdogan et al (2023) among European countries discovered a larger likelihood of higher dividends being paid by companies with more robust ESG performance. The study also found that higher ESG controversy scores reduced dividend distributions.…”

Section: Connection Between Environmental Social and Governance And D...mentioning

confidence: 65%

“…Several studies have investigated the relationship between ESG and corporate dividend choices in various nations. Nevertheless, the results are inconclusive because although most research has shown a positive link between ESG and dividend payout in different situations (Cheung et al, 2016;Dewasiri and Abeysekera, 2020;Ellili, 2022;Vasconcelos et al, 2022;Barros et al, 2023;Bilyay-Erdogan et al, 2023;Lakhal et al, 2023), some studies have also indicated a negative association (Niccolo et al, 2020;Saeed and Zamir, 2021).…”

Section: Connection Between Environmental Social and Governance And D...mentioning

confidence: 99%

“…The prior body of research concerning the link between ESG aspects and dividend payments has provided inconclusive results, necessitating further investigation to achieve better clarity (Cheung et al, 2016;Benlemlih, 2019;Dewasiri and Abeysekera, 2020;Matos et al, 2020;Saeed and Zamir, 2021;Vasconcelos et al, 2022;Bilyay-Erdogan et al, 2023). The majority of studies on the ESG-dividend nexus have focused on developed economies or taken a global perspective (Cheung et al, 2016;Bilyay-Erdogan et al, 2023). There is, however, a gap in the research with regard to investigating this link with a specific focus on the critical cohort of emerging markets, namely, the BRICS nations.…”

Section: Jibr 162mentioning

confidence: 99%

“…The increasing focus on ESG has led to a growing emphasis on the literature on ESG. Various researchers have tried to investigate the influence of ESG on the firm's major decisions, which are investment decisions, financing decisions (Ramirez et al, 2022) and dividend decisions (Bilyay-Erdogan et al, 2023;Matos et al, 2020).…”

Section: Introductionmentioning

confidence: 99%

“…Also, an active investor protection environment obliges firms to increase transparency in their information disclosure (Bushman et al, 2004), thereby improving their ESG disclosure. The dividend decision policies of companies are believed to be tangibly influenced by the level of their ESG practices (Cheung et al, 2016;Barros et al, 2023;Bilyay-Erdogan et al, 2023), which in turn are influenced by the regulatory enforcement and investor protection environment of the nation. Therefore, the interrelationships between a firm's ESG, dividend decision and a country's institutional characteristics highlight a crucial moderating role that country-level investor protection legislation and regulatory enforcement mechanisms play in shaping corporate dividend payout strategies.…”

Section: Introductionmentioning

confidence: 99%

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Unveiling the ESG-dividend nexus: the moderating role of investor protection and regulatory enforcement

Dua,

Sharma

2024

JIBR

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Purpose The mounting focus on environmental, social and governance (ESG) factors in business has sparked substantial curiosity in understanding the nexus between ESG and the companies’ strategic decisions. This study aims to investigate the influence of firms’ ESG disclosure scores on their dividend payout. Furthermore, it examines the nuanced dynamics of this relationship by exploring the moderating role of the country’s investor protection regulations and regulatory enforcement. Design/methodology/approach This study uses pooled ordinary least square regression with year, industry and country effects. It analyzes a balanced panel data set of 192 non-financial firms drawn from the primary equity indices of BRICS nations. This study examined the data of six years spanning 2015–2020. Findings The findings discover a significantly positive relationship between ESG scores and dividend payout ratio, conveying that firms with higher ESG scores allocate more of their profits as dividends. Furthermore, the finding reveals that country-level robust investor protection and effective regulatory enforcement mechanisms undermine the positive association between ESG ratings and payouts of dividends, suggesting that the ESG disclosure of firms operating in a setting characterized by enhanced investor safeguards and stricter regulatory oversight will exert less influence on their dividend decisions. Originality/value To the best of the authors’ knowledge, this is the first study to concentrate on the ESG–dividend nexus in the BRICS countries. Furthermore, this study used each country’s investor protection index and regulatory enforcement scores to comprehend the influence of country-level legal frameworks in shaping the relationship between ESG and dividend decisions, thus adding value to the existing literature on corporate sustainability.

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Section: Connection Between Environmental Social and Governance And D...mentioning

confidence: 65%

Section: Connection Between Environmental Social and Governance And D...mentioning

confidence: 99%

Section: Jibr 162mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Unveiling the ESG-dividend nexus: the moderating role of investor protection and regulatory enforcement

Dua,

Sharma

2024

JIBR

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A PRISMA‐Based Systematic Review on Economic, Social, and Governance Practices: Insights and Research Agenda

Ed‐Dafali,

Adardour,

Derj

et al. 2024

Bus Strat Env

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The article synthesizes existing research on economic, social, and governance (ESG) practices and explores their impact on corporate sustainability and financial outcomes. A systematic literature review (SLR) followed PRISMA guidelines, analyzing 85 peer‐reviewed articles from high‐quality journals indexed in Scopus. The results reveal that robust governance mechanisms—such as board diversity, strategic integration of ESG criteria, and effective risk management—are key drivers of enhanced ESG performance and corporate profitability. However, the findings also highlight significant gaps in current knowledge, particularly regarding emerging concepts like green innovation, ESG controversies, and digital transformation. The study concludes that further research is needed to develop a more nuanced understanding of how different governance structures and ESG practices interact and to provide clearer guidance for policymakers and corporate managers in fostering sustainable business practices.

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The impact of environmental, social and governance (ESG) score on dividend payment of large family firms: What is the role of financial constraints? International evidence

Maquieira,

Espinosa‐Méndez,

Arias

2023

Corp Soc Responsibility Env

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This article studies the relationship between environmental, social and governance (ESG) score and dividend payment for 274 large family firms in the period 2015–2021. This research has three contributions to the literature. First, to the best of our knowledge this is the first article to focus on large family firms considering their greater importance in stock ownership around the world. Second, this sample covers both developed and emerging nations. Third, our study not only establishes a connection between ESG (Environmental, Social, and Governance) criteria and dividend payments but also considers how financial constraints moderate the relationship between ESG scores and dividend payments. The results indicate a positive influence of ESG scores on dividend payments. Furthermore, financial constraints of family firms are negatively related to dividend payments. Finally, the moderating effect of financial constraints on the relationship between dividend payment and ESG show that for high levels of financial constraints that dividends are less sensitive to ESG score. The opposite effect is reported when firms show low levels of financial constraints. Practically speaking, the study demonstrates the value of creating a dividend policy that is in line with the ESG score because they are complementary signals. Additionally, it is important to consider financial limitations when planning financial reserves in family firms. This is due to the diminished correlation between ESG score and dividend payments in the presence of financial constraints.

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ESG performance and dividend payout: A channel analysis

Cited by 32 publications

References 26 publications

Unveiling the ESG-dividend nexus: the moderating role of investor protection and regulatory enforcement

Unveiling the ESG-dividend nexus: the moderating role of investor protection and regulatory enforcement

A PRISMA‐Based Systematic Review on Economic, Social, and Governance Practices: Insights and Research Agenda

The impact of environmental, social and governance (ESG) score on dividend payment of large family firms: What is the role of financial constraints? International evidence

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