Does Sex Matter? Director Gender and Propensity to Pay Dividends

• In Event: Gender Issues and Work Life Balance 1

Abstract

This study shows the presence, and proportion, of female board directors is positively and significantly associated with the propensity to pay dividends, after controlling for other determinants of dividend payouts. We argue that female directors bring a unique set of characteristics to the boardroom which serves to increase investor protection and effectively monitor and control management, arguably the two fundamental functions of an independent board. Meanwhile, dividend payout is considered to be one of the tools to protect investors’ interests and to control/monitor management by preventing a manager’s expropriation of the firm’s free cash flow. This study extends dividend payout, gender diversity, and corporate governance literature. The results will be of interest to public companies’ stakeholders, in particular, managers, shareholders, creditors, and board of directors. The results of this study may also be of interest to policy makers who advocate increasing gender diversity on corporate boards.

Authors

• Mai Dao, University of Toledo

• Veena Looknanan Brown, University of Wisconsin-Milwaukee