Relationship between Board Characteristics and Dividend Payment Policies

Abstract

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.

Revenue Diversification and Financial Performance of Commercial Banks, Kenya

“…However, this study only examined financial performance from 2015 to 2018. Moloi, Nharo, and Hlobo (2021) investigated the relationship between board composition and dividend distribution policies among the 40 largest corporations on the Johannesburg Stock Exchange (JSE) from 2010 to 2015. Using panel data and a fixed effect model, the study found an inverse relationship between dividend payout ratio, profitability, and liquidity, while growth, net profit margins, leverage, and company size had a positive correlation with dividend payments.…”

Determinants of Cash Distribution Options in South African Listed Firms: An Empirical Analysis of Earnings, Company Size, and Economic Value Added

“…In line with established practices outlined in the studies by Amidu and Abor (2006), Sarwar et al (2018), Tahir et al (2020), as well as Moloi et al (2021), the study adopted the generic panel model specification as established.…”

“…Additionally, South Africa has a more-advanced regulatory framework and disclosure requirements, making it possible to access comprehensive financial data for the study analysis. Furthermore, South Africa's economic and political stability, as well as its relatively mature stock exchange provide a conducive environment for studying corporate finance dynamics (Moloi et al 2021). The country also represents a unique blend of both emerging and developed market characteristics, making it an interesting case study for understanding how factors such as earnings performance, cash flows, corporate governance, tax effects, firm size, and risk attitudes influence cash distribution decisions in a transitioning economy (Kaźmierska-Jóźwiak et al 2022).…”

“…The country also represents a unique blend of both emerging and developed market characteristics, making it an interesting case study for understanding how factors such as earnings performance, cash flows, corporate governance, tax effects, firm size, and risk attitudes influence cash distribution decisions in a transitioning economy (Kaźmierska-Jóźwiak et al 2022). In contrast to some other African nations, South Africa's corporate landscape has more-pronounced connections to global financial markets, multinational corporations, and international investors (Moloi et al 2021). These factors can impact the financing choices and cash distribution policies of South African firms in distinctive ways, warranting a focused examination of the country's context.…”