The Relationship between Board Characteristics and Dividend Payment Policies
the JSE Top 40 Listed Companies cases
DOI:
https://doi.org/10.59051/joaf.v12i1.439Keywords:
Dividend pay-out ratio, resource dependence theory, agency theory, corporate governanceAbstract
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.
Downloads
References
Downloads
Published
Issue
Section
License
Copyright (c) 2021 Prof, Ms, Ms
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).
