Does Board Independence Matters for Dividend Policy in Emerging Economies

This study examines the effect of non-executive/independent directors on dividend payments in Indian-listed firms. Independent directors safeguard investor interests by ensuring an adequate return on investment through effective supervision; however, in countries with concentrated ownership, indepen...

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Bibliographic Details
Published inProcedia computer science Vol. 221; pp. 853 - 860
Main Authors Kumar, Sanjeev, Sasidharan, Aghila, Olasiuk, Hanna, Vihari, Nitin Simha
Format Journal Article
LanguageEnglish
Published Elsevier B.V 2023
Subjects
Corporate Governance
Dividend Policy
Emerging Economies
India
Emerging Economies
Dividend Policy
Corporate Governance
India
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Summary:This study examines the effect of non-executive/independent directors on dividend payments in Indian-listed firms. Independent directors safeguard investor interests by ensuring an adequate return on investment through effective supervision; however, in countries with concentrated ownership, independent directors are unable to exercise their authority due to the opportunistic behavior of the promoter confirming entrenchment theory. The relationship between board size and dividend policy is consistent with the resource dependence theory, which posits that the skills and knowledge of directors are important to firm resources. Institutional investors negatively affect dividends because they use dividends to transfer funds from firms. Size and cashflows positively affect dividends, whereas leverage has a negative effect on dividends.
ISSN:1877-0509
1877-0509
DOI:10.1016/j.procs.2023.08.061