IMPACT OF BOARD TRAITS ON ORGANISATIONS’ DIVIDEND PAYOUT. EVIDENCE FROM PAKISTAN

Abstract

The study aims to evaluate the impact of board traits on the organizations’ dividend pay-out ratio. For the purpose, quantitative research approach was being utilized. The data of non-financial companies, listed on Pakistan Stock Exchange, was scrutinized over a period of seven years, 2012-2019. Thereafter, the panel data was analysed through panel least square (PLS) random effect model. The results unveiled that the board size, board tenure, board subcommittees tenure have a positive and statistically significant effect on the dividend pay-out ratio. On the same theme, board skills development has significant but negative effect on the dividend payout ratio. Nonetheless, the board gender diversity has a positive and insignificant effect while, board independence has a negative and insignificant effect on the dividend pay-out ratio. To encapsulate, well-organized board can enhance shareholders' wealth. The findings of the study will help companies to familiarize them with the amicable board traits and their impact on the performance, consequently, it will enable companies to affectively compose their boards. Further, it will provide insights to the policymakers and regulators of companies to adequately account for the shareholders’ wealth maximization while devising policies regarding internal governance of the companies, under a distinct legal framework, exists in the countries of emerging economies such as Pakistan.

Keywords

• dividend pay-out ratio
• corporate governance
• gender diversity