Influential-female-directors and dividend decisions: evidence from an emerging economy

Abstract

Purpose

This study introduces influential-female-directors as a board-gender-diversity variable that captures not only the female representation on the board but also their position on the informal-boardroom-hierarchy. Further, this study investigates whether such directors have a significant influence on the dividend-payout-decisions of leading firms in an emerging economy, India, where concentrated ownership is prevalent and explores the moderation effect they exert on dividend–ownership relationship.

Design/methodology/approach

This study uses generalized methods of moments (GMM) to tackle the issues put forth by the sample of 450 firm-year observations.

Findings

This study finds that influential-female-directors have a significant influence on the dividend-payout-decisions of the firm. Additionally, the presence of female directors in the audit-committee makes the board more vigilant and encourages foreign institutional investors to expect more dividends. Furthermore, domestic institutional investors expect a return on their investments through share price appreciation rather than dividends, and the influence of promoters in dividend-payout-decisions is reduced in the presence of such directors.

Originality/value

This study pioneers the use of influential-female-directors as a board-gender-diversity metric and carries an in-depth analysis of the influence and moderation effect they exert on the dividend-payout-decisions of the board and the dividend expectations of different institutional investors, respectively.

Citation

Mandal, T., Chatterjee, C. and Bandyopadhyay, A. (2024), "Influential-female-directors and dividend decisions: evidence from an emerging economy", Equality, Diversity and Inclusion, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/EDI-12-2023-0444