What Does the Board Say?

Abstract: Methodology A quantitative study with a deductive approach. Panel data are used in the multiple linear regression to analyse and investigate relationships between dividend payout ratio and the independent variables. Theoretical Perspectives Main theoretical frameworks of the study are the Outcome Hypothesis and Substitution Hypothesis. In addition, Agency Theory, Stewardship Theory, Stakeholder Theory, as well as traditional dividend hypotheses are discussed. Empirical Foundation The data consists of 803 dividend paying firms listed on NYSE and NASDAQ between 2015-2019. The data has been collected from Bloomberg Terminal. Result The empirical evidence documents that board director age, frequency of board meetings and CEO duality have a significant positive impact on the level of dividend payout ratio. Conclusions The analysis shows that high dividends are a substitute for weak governance, in accordance with the Substitution Hypothesis.