Does Corporate Board Diversity Affect Corporate Payout Policy?1. (February 2016)

• Record Type: Journal Article
• Authors: Byoun, Soku; Chang, Kiyoung; Kim, Young Sang
• Is Part Of: Asia-Pacific journal of financial studies. Volume 45:Number 1(2016:Feb.)
• Page Start: 48
• Page End: 101
• Publication Date: 2016-02
• Subjects: Board diversity -- Payout policy -- Monitoring -- Free cash flow -- Agency problems; Pacific Area -- Economic conditions -- Periodicals; Finance -- Asia -- Periodicals; Finance -- Pacific Area -- Periodicals; Asia -- Economic conditions -- Periodicals; 332.09505
• DOI: 10.1111/ajfs.12119
• Languages: English
• ISSNs: 2041-9945

Abstract

Abstract: We find that firms with gender/racial diversity in their boards are more likely to pay larger dividends than firms with non‐diverse boards. Our results suggest that board diversity has a significant impact on dividend payout policy. The impact of board diversity on dividend payout policy is particularly conspicuous for firms with potentially greater agency problems of free cash flow, suggesting that a diverse board helps to mitigate the free cash flow problem. Our findings are consistent with the argument that board diversity enhances the monitoring function of directors and shareholder–manager conflict resolution for the benefit of shareholders.