Corporate governance and dividend pay-out policy in UK listed SMEs

Corporate governance and dividend pay-out policy in UK listed SMEs PurposeThe 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/approachThe data are analysed by employing multivariate regression techniques, including estimating fixed effects, lagged effects and two-stage least squares regressions.FindingsThe 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/valueThis 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Accounting and Information Management Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1834-7649
DOI
10.1108/IJAIM-02-2017-0020
Publisher site
See Article on Publisher Site

Abstract

PurposeThe 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/approachThe data are analysed by employing multivariate regression techniques, including estimating fixed effects, lagged effects and two-stage least squares regressions.FindingsThe 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/valueThis 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.

Journal

International Journal of Accounting and Information ManagementEmerald Publishing

Published: Oct 2, 2017

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