Women in a Dual Board System and Dividend Policy

Abstract

We investigate whether firms with the presence of female on its board of commissioners and board of directors are associated with higher dividend policy. This paper uses Indonesian setting as a country with a dual board system implying that the role of board of commissioners and board of directors is explicitly separated. Using panel data on 525 publicly listed firms in Indonesia between 2011 and 2018, we find that the women's presence has different impacts on the dividend policy depending on their role as an executive or non-executive on the board. Female directors are negatively associated with cash dividend payments, while female commissioners positively impact dividend payment in the case of family-controlled firms only. Our results contribute to the literature on board gender diversity by showing different roles and behavior of boards in each tier in the corporate dividend policy, thus providing insights on corporate governance in a two-tiered board system in developing countries.

Female directors, the institutional environment and dividend policy: evidence from ASEAN-5 commercial banks

“…Table 2 describes all the variables used in this study and shows that ASEAN-5 companies, on average, paid cash dividends at 2.45% of net income (PAYOUT). This percentage was higher than that claimed by Risfandy et al (2021), who used an Indonesian sample.…”

“…For robustness checking [1], we added the return on equity (ROE) and net interest margins (NIM) variables, following Trinugroho et al (2017Trinugroho et al ( , 2018 as proxies for profitability. Following Risfandy et al (2021), we also added dividend to total assets (DIVTA) as an alternative proxy for dividends. Prior studies have also investigated the importance of board directors' education levels in determining firms' dividend policies, since the selection process for board members should consider their educational qualifications, which are believed to indicate intelligence.…”

“…Using panel data on 525 public companies in Indonesia (a developing country) between 2011 and 2018, Risfandy et al (2021) found that the impact of female board members on dividend policy was also negative but only for female directors. However, the nexus became positive for women sitting on boards as female commissioners, and Risfandy et al (2021) concluded that women's impact depends on their roles as executive (board of directors) or nonexecutive (board of commissioners) board members.…”

“…When females sit on boards of directors, opportunities for dividend payouts increase because female directors balance shareholders' interests more effectively, especially for minorities (Purba et al, 2022). In other words, female board members can improve company governance mechanisms, ultimately reducing agency problems (Risfandy et al, 2021). Female directors pay greater attention to agency issues, shareholder welfare and maintaining their companies' reputations (Ye et al, 2019).…”

“…Second, although a large body of literature has examined the effect of gender diversity on dividend policy (Duygun et al, 2018;Risfandy et al, 2021;Setiawan et al, 2016;Ye et al, 2019), the empirical evidence regarding financial institutions is relatively limited because banking institutions' characteristics differ from those of other firms. Financial institutions are responsible for protecting their depositors by maintaining financial system stability and SEF 40,4 reducing systemic risk (Uyar et al, 2022).…”