Corporate governance and dividend pay-out policy in UK listed SMEs: the effects of corporate board characteristics

Elmagrhi, Mohamed H, Ntim, Collins G, Crossley, Richard M, Malagila, John K, Fosu, Samuel and Vu, Tien V (2017) Corporate governance and dividend pay-out policy in UK listed SMEs: the effects of corporate board characteristics. International Journal of Accounting and Information Management, 25 (4). pp. 459-483. ISSN 1834-7649

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Abstract

Purpose
The purpose of this paper is to examine the extent to which corporate board characteristics influence the level of dividend pay-out ratio using a sample of UK small- and medium-sized enterprises from 2010 to 2013 listed on the Alternative Investment Market.

Design/methodology/approach
The data are analysed by employing multivariate regression techniques, including estimating fixed effects, lagged effects and two-stage least squares regressions.

Findings
The results show that board size, the frequency of board meetings, board gender diversity and audit committee size have a significant relationship with the level of dividend pay-out. Audit committee size and board size have a positive association with the level of dividend pay-out, whilst the frequency of board meetings and board gender diversity have a significant negative relationship with the level of dividend pay-out. By contrast, the findings suggest that board independence and CEO role duality do not have any significant effect on the level of dividend pay-out.

Originality/value
This is one of the first attempts at examining the relationship between corporate governance and dividend policy in the UK’s Alternative Investment Market, with the analysis distinctively informed by agency theoretical insights drawn from the outcome and substitution hypotheses.

Item Type: Article
Keywords: Corporate governance, Corporate board characteristics, Dividend pay-out policy, Outcome versus substitution hypothesis, UK-listed SMEs
Schools and Departments: University of Sussex Business School > Accounting and Finance
SWORD Depositor: Mx Elements Account
Depositing User: Mx Elements Account
Date Deposited: 11 May 2022 10:57
Last Modified: 11 May 2022 11:00
URI: http://sro.sussex.ac.uk/id/eprint/105824

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