The impact of board composition on dividend payout policy: evidence from Turkey
Article Sidebar
Main Article Content
Abstract
Examining the effect of board composition on dividend payment policies was the aim of this study. A sample of non-financial companies listed between 2016 and 2020 on the Borsa Istanbul Stock Exchange (BIST) was used in the study. To reflect board composition in the study, the following metrics were used: board size (BSIZE), board independence (BIND), board expertise (BEXP), and board age diversity (BAGE). In addition, a number of control variables were incorporated, such as profitability (PROFTA), firm age (FAGE), and firm size (FSIZE). The dividend per share, which indicated the company's dividend distribution policy, served as the study's dependent variable. The findings highlight the significance of board composition in explaining dividend policy variations among Turkey firms. More specifically, the frequency of board size, firm age, and board age diversity are all positively and significantly correlated with the propensity to pay dividends, while the degree of board expertise and profitability are negatively correlated with dividend policy. The research's conclusions are consistent with the agency theory, and resource dependence theory of dividend policy.
Downloads
Article Details
References
Abdelsalam, Omneya, Ahmed El‐Masry, and Sabri Elsegini. 2008. “Board Composition, Ownership Structure and Dividend Policies in an Emerging Market: Further Evidence from CASE 50.” Managerial finance 34(12): 953–964.
Abdullah, Hariem. 2021. “Profitability and Leverage as Determinants of Dividend Policy: Evidence of Turkish Financial Firms.” Eurasian Journal of Management & Social Sciences 2(3): 15–30.
Abor, Joshua, and Vera Fiador. 2013. “Does Corporate Governance Explain Dividend Policy in Sub‐Saharan Africa?” International Journal of Law and Management 55(3): 201–225.
Adjaoud, Fodil, and Nadia Hermassi. 2017. “THE IMPACT OF CORPORATE Governance Mechanisms on The Dividend Policy of Canadian FIRMS: EMPIRICAL STUDY.” International Journal of Business, Accounting, & Finance 11(1).
Ahmad, Muhammad Naveed, Farman Ullah Khan, and Yousaf Khan. 2019. “Oard Composition, Ownership Structure and Dividend Payout Policy: Evidence from PSX-100 Index of Pakistan.” Journal of Business & Tourism 5(1): 55–73.
Ain, Qurat Ul et al. 2021. “Board Gender Diversity and Dividend Policy in Chinese Listed Firms.” Sage Open 11(1): 2158244021997807.
Al-Najjar, Basil, and Erhan Kilincarslan. 2016a. “The Effect of Ownership Structure on Dividend Policy: Evidence from Turkey.” Corporate Governance: The international journal of business in society, 16(1): 135-161.
Al‐Najjar, Basil, and Khaled Hussainey. 2009. “The Association between Dividend Payout and Outside Directorships.” Journal of Applied Accounting Research.
Alagathurai, Ajanthan. 2013. “Corporate Governance and Dividend Policy: A Study of Listed Hotels and Restaurant Companies in Sri Lanka.” International Journal of Management, IT and Engineering 3(12): 221-237.
Anderson, Ronald C, David M Reeb, Arun Upadhyay, and Wanli Zhao. 2011. “The Economics of Director Heterogeneity.” Financial Management 40(1): 5–38.
Ararat, Melsa, Mine Aksu, and Ayse Tansel Cetin. 2015. “How Board Diversity Affects Firm Performance in Emerging Markets: Evidence on Channels in Controlled Firms.” Corporate Governance: An International Review 23(2): 83–103.
Baker, H Kent, Shantanu Dutta, and Samir Saadi. 2008. “Impact of Financial and Multinational Operations on Manager Perceptions of Dividends.” Global Finance Journal 19(2): 171–186.
Baker, H Kent, Nitesh Pandey, Satish Kumar, and Arunima Haldar. 2020. “A Bibliometric Analysis of Board Diversity: Current Status, Development, and Future Research Directions.” Journal of Business Research 108: 232–246.
Baranchuk, Nina, and Philip H Dybvig. 2009. “Consensus in Diverse Corporate Boards.” The Review of Financial Studies 22(2): 715–747.
Bataineh, Hanady. 2021. “The Impact of Ownership Structure on Dividend Policy of Listed Firms in Jordan.” Cogent Business & Management 8(1): 1863175.
Benjamin, Samuel Jebaraj, Shaista Wasiuzzaman, Helen Mokhtarinia, and Niloufar Rezaie Nejad. 2016. “Family Ownership and Dividend Payout in Malaysia.” International Journal of Managerial Finance 12(3): 314–334.
Berezinets, Irina, Yulia Ilina, and Liudmila Alekseeva. 2017. “Dividend Policy and Ownership Structure: A Study of Russian Dual-Class Stock Companies.” Corporate Ownership & Control, 15 (1-1): 199–212.
Borokhovich, Kenneth A, Kelly R Brunarski, Yvette Harman, and James B Kehr. 2005. “Dividends, Corporate Monitors and Agency Costs.” Financial Review 40(1): 37–65.
Boshnak, Helmi A. 2021. “The Impact of Board Composition and Ownership Structure on Dividend Payout Policy: Evidence from Saudi Arabia.” International Journal of Emerging Markets (October), 12(3), 446-465.
Brown, Lawrence D, and Marcus L Caylor. 2006. “Corporate Governance and Firm Valuation.” Journal of accounting and public policy 25(4): 409–434.
Byoun, Soku, Kiyoung Chang, and Young Sang Kim. 2016. “Does Corporate Board Diversity Affect Corporate Payout Policy?” Asia‐Pacific Journal of Financial Studies 45(1): 48–101.
Carter, David A, Betty J Simkins, and W Gary Simpson. 2003. “Corporate Governance, Board Diversity, and Firm Value.” Financial review 38(1): 33–53.
Chen, Jie, Woon Sau Leung, and Marc Goergen. 2017. “The Impact of Board Gender Composition on Dividend Payouts.” Journal of Corporate finance 43: 86–105.
Cheng, Shijun. 2008. “Board Size and the Variability of Corporate Performance.” Journal of financial economics 87(1): 157–176.
Dalton, Dan R., Catherine M. Daily, Alan E. Ellstrand, and Jonathan L. Johnson. 1998. “Meta-Analytic Reviews of Board Composition, Leadership Structure, and Financial Performance.” Strategic Management Journal 19(3): 269–290.
Darmadi, Salim. 2011. “Board Diversity and Firm Performance: The Indonesian Evidence.” Corporate ownership and control Journal 8.
Elmagrhi, Mohamed H et al. 2017. “Corporate Governance and Dividend Pay-out Policy in UK Listed SMEs: The Effects of Corporate Board Characteristics.” International Journal of Accounting & Information Management 25(4): 459–483.
Faccio, Mara, Larry H P Lang, and Leslie Young. 2001. “Dividends and Expropriation.” American economic review 91(1): 54–78.
Fama, Eugene F, and Michael C Jensen. 1983. “Separation of Ownership and Control.” The journal of law and Economics 26(2): 301–325.
Franc-Dbrowska, Justyna, and Magdalena Mądra-Sawicka. 2020. “Determinants of Dividend Payout Decisions–the Case of Publicly Quoted Food Industry Enterprises Operating in Emerging Markets.” Economic research-Ekonomska istraživanja 33(1): 1108–1129.
Gill, Amarjit S, and John D Obradovich. 2012. “Corporate Governance, Institutional Ownership, and the Decision to Pay the Amount of Dividends: Evidence from USA.” International Research Journal of Finance and Economics 97(September): 60–71.
Glen, Jack D, Yannis Karmokolias, Robert R Miller, and Sanjay Shah. 1995. Dividend Policy and Behavior in Emerging Markets: To Pay or Not to Pay. The World Bank.
González, Maximiliano, Alexander Guzmán, Carlos Pombo, and María-Andrea Trujillo. 2014. “Family Involvement and Dividend Policy in Closely Held Firms.” Family Business Review 27(4): 365–385.
Gregory, Holly J. 2000. “International Comparison of Corporate Governance Guidelines and Codes of Best Practice.” Nueva York: Weil, Gotshal y Manges: 52-65.
Hassan, Rohail, and Maran Marimuthu. 2016. “Corporate Governance, Board Diversity, and Firm Value: Examining Large Companies Using Panel Data Approach.”
Jensen, Michael C. 1986. “Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers.” The American economic review 76(2): 323–329.
Jensen, Michael C, and William H Meckling. 1976. “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” Journal of financial economics 3(4): 305–360.
Jiraporn, Pornsit, and Yixi Ning. 2006. “Dividend Policy, Shareholder Rights, and Corporate Governance.” Shareholder Rights, and Corporate Governance (September 18, 2006).
Juhmani, Omar Issa. 2020. “Corporate Boards, Ownership Structure and Dividend Payout: Evidence from Bahrain.” Journal of Critical Reviews 7(12): 37–43.
Khan, Ajab. 2022. “Ownership Structure, Board Characteristics and Dividend Policy: Evidence from Turkey.” Corporate Governance: The International Journal of Business in Society 22(2): 340–363. https://doi.org/10.1108/CG-04-2021-0129.
Khan, Ajab, Mustafa Kemal Yilmaz, and Mine Aksoy. 2022. “Does Board Demographic Diversity Affect the Dividend Payout Policy in Turkey?” EuroMed Journal of Business.
Klein, April. 2002. “NEW YORK UNIVERSITY SCHOOL OF LAW NYU Center for Law and Economics Earnings Management.” Journal of Accounting and Economics 33(06): 375–400. http://www.sciencedirect.com/science/article/pii/S0165410102000599.
Lewis, Glass. 2020. “Proxy Paper Guidelines an Overview of the Glass Lewis Approach to Proxy Advice Turkey.”: 175.
Mahadeo, Jyoti D, Teerooven Soobaroyen, and Vanisha Oogarah Hanuman. 2012. “Board Composition and Financial Performance: Uncovering the Effects of Diversity in an Emerging Economy.” Journal of business ethics 105: 375–388.
McGuinness, Paul B, Kevin C K Lam, and João Paulo Vieito. 2015. “Gender and Other Major Board Characteristics in China: Explaining Corporate Dividend Policy and Governance.” Asia Pacific Journal of Management 32: 989–1038.
Mehdi, Mili, Jean-Michel Sahut, and Frédéric Teulon. 2017. “Do Corporate Governance and Ownership Structure Impact Dividend Policy in Emerging Market during Financial Crisis?” Journal of applied accounting research, 18(3): 274-297.
Miller, Merton H, and Franco Modigliani. 1961. “Dividend Policy, Growth, and the Valuation of Shares.” the Journal of Business 34(4): 411–433.
Mirza, Nauman Iqbal, and Qaiser Ali Malik. 2019. “Effects of Corporate Governance on Dividend Decisions with a Focus on Moderating Role of Board Diversity.” Int. Trans. J. Eng. Manag. Appl. Sci. Technol 10: 1–17.
Mishra, Ram Kumar, and Shital Jhunjhunwala. 2013. Diversity and the Effective Corporate Board. Academic Press.
Morrow-Howell, Nancy, James Hinterlong, and Michael Sherraden. 2001. Productive Aging: Concepts and Challenges. JHU Press: 285-311.
Mustafa, Adil Abdulqader, Wan Sallha Yusoff, and Aree Saeed Mustafa. 2023a. “The Moderating Role of Wedge-Control Ownership on the Relationship between Board Structure and Dividend Policy.” Journal of Contemporary Issues in Business and Government Vol 29(03): 11-21.
Mustafa, Adil Abdulqader, Wan Sallha Yusoff, and Aree Saeed MUSTAFA Mustafa. 2023b. “The Impact of Female Director on Dividend Payout : Contingent on CONTROL-Ownership Wedge Kontrol Ayrimi İncelemesi.” 1: 1–14.
Nguyen, Ha Viet, Hung Ngoc Dang, and Hung Hoang Dau. 2021. “Influence of Corporate Governance on Dividend Policy in Vietnam.” The Journal of Asian Finance, Economics and Business 8(2): 893–902.
Ntim, Collins G. 2011. “The King Reports, Independent Non-Executive Directors and Firm Valuation on the Johannesburg Stock Exchange.” Corporate Ownership and Control 9(1): 428–440.
La Porta, Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert Vishny. 2000. “Investor Protection and Corporate Governance.” Journal of financial economics 58(1–2): 3–27.
Post, Corinne, and Kris Byron. 2015. “Women on Boards and Firm Financial Performance: A Meta-Analysis.” Academy of management Journal 58(5): 1546–1571.
Qa’dan, Mohammad Bassam Abu, and Mishiel Said Suwaidan. 2018. “Board Composition, Ownership Structure and Corporate Social Responsibility Disclosure: The Case of Jordan.” Social Responsibility Journal 15(1): 28–46.
Roy, Amitava. 2015. “Dividend Policy, Ownership Structure and Corporate Governance: An Empirical Analysis of Indian Firms.” Indian Journal of Corporate Governance 8(1): 1–33.
Salancik, Gerald R, and Jeffrey Pfeffer. 1978. “A Social Information Processing Approach to Job Attitudes and Task Design.” Administrative science quarterly: 224–253.
Sawicki, Julia. 2009. “Corporate Governance and Dividend Policy in Southeast Asia Pre-and Post-Crisis.” The European Journal of Finance 15(2): 211–230.
Setiawan, Rahmat, and Annisa Paramaswary Aslam. 2018. “Board Diversity and Dividend Payout Ratio: Evidence from Family Firms in Indonesia.” Jurnal Minds: Manajemen Ide Dan Inspirasi 5(2): 133–146.
Shahwan, Yousef, and Tareq Hammad Almubaydeen. 2020. “Effects of Board Size, Board Composition and Dividend Policy on Real Earnings Management in the Jordanian Listed Industrial Firms.” International Journal of Financial Research 11(4): 195–202.
Sharma, Vineeta. 2011. “Independent Directors and the Propensity to Pay Dividends.” Journal of Corporate finance 17(4): 1001–1015.
Shehu, Musa. 2015. “Board Characteristics and Dividend Payout: Evidence from Malaysian Public Listed Companies.” Research Journal of Finance and Accounting 6(16): 35–40.
Singh, Val. 2007. “Ethnic Diversity on Top Corporate Boards: A Resource Dependency Perspective.” The International Journal of Human Resource Management 18(12): 2128–2146.
Soliman, Mohammed. 2013. “Ownership Structure, Board Composition, and Dividend Policies-Evidence from Saudi Arabia.” Board Composition, and Dividend Policies-Evidence from Saudi Arabia (April 30, 2013).
Su, Zhong-qin, Hung-Gay Fung, Deng-shi Huang, and Chung-Hua Shen. 2014. “Cash Dividends, Expropriation, and Political Connections: Evidence from China.” International Review of Economics & Finance 29: 260–272.
Sumail, La Ode. 2018. “Corporate Governance and Dividend Payout Ratio in Non-Financial Firms Listed in Indonesian Stock Exchange.” Business and Economic Horizons (BEH) 14(1232-2019–874): 851–861.
Tahir, Hussain, Ridzuan Masri, and Mahfuzur Rahman. 2020. “Determinants of Dividend Pay-out Policy of Listed Non-Financial Firms in Malaysia.” International Journal of Financial Research 11(2): 68–76.
Thanatawee, Yordying. 2013. “Ownership Structure and Dividend Policy: Evidence from Thailand.” International Journal of Economics and Finance 5(1): 121–132.
Xie, Biao, Wallace N. Davidson, and Peter J. Dadalt. 2003. “Earnings Management and Corporate Governance: The Role of the Board and the Audit Committee.” Journal of Corporate Finance 9(3): 295–316.
Ye, Dezhu et al. 2019. “Does Board Gender Diversity Increase Dividend Payouts? Analysis of Global Evidence.” Journal of Corporate Finance 58: 1–26.