The Relationship Between Board Characteristics and Corporate Dividend Policy: Evidence From Jordan

Abstract

This paper examines the impact of Board characteristics (board size, board independence, and board gender) on the corporate policy of dividend for a set of 132 firm-year listed companies of the manufacturing sector from Amman Stock Exchange between the years 2016-2018.. The paper uses logistic regression in analyzing the sample and the results show that there is a positive relationship between the Board of directors' characteristics (Board size, board diversity depicted as outside directors and board gender) and the corporate dividend policy. Our recommendations are that Jordanian manufacturing companies should comply with the Jordanian code of corporate governance and diversify their corporate boards of directors by appointing more outside directors and more female directors within their boards. This will also help to create a healthy relationship between the boards and the owners of the firms or the shareholders and minimize the agency conflict theory MAKALE BİLGİLERİ

Kurumsal Yönetimin Firma Temettü Politikası Üzerindeki Etkisi: Gana Örneği

“…The result suggests that the possibility of paying dividends rises by 0.38 percent for The Journal of Accounting and Finance-April 2022 (94): 223-238 a percentage increase in independent executives on the corporate board. This result is aligned with earlier studies (Shahid et al, 2016;Tahir et al, 2020;Kilincarslan, 2021;Alshabibi et al, 2021;Farooque et al, 2021;Amedi and Mustafa, 2021). The result implies that independent directors of Ghanaian listed firms push for higher cash dividends, thereby serving the best interests of corporate shareholders.…”

“…Outside directors ensure that shareholders' interests are served including higher dividend payouts. Most of the extant studies show that dividend policy is directly influenced by board independence (Shahid et al, 2016;Kilincarslan, 2021;Alshabibi et al, 2021;Farooque et al, 2021;Amedi and Mustafa, 2021). Board independence is the proportion of independent executives on a company's board.…”

The Impact of Female Director on Dividend Payout: Contingent on Control-Ownership Wedge

“…Dividends alleviate the agency problem because they limit managers' ability to deploy surplus cash flows for their own interests while providing no significant dividend to stakeholder. Furthermore, when corporations produce money by releasing new capital, the capital market will scrutinize the management when distributing dividends, establishing a relationship between dividends and corporate governance (Amedi and Mustafa 2020).…”