Does board demographic diversity affect the dividend payout policy in Turkey?

Abstract

Purpose

The purpose of this study is to investigate the impact of board demographic diversity on the dividend payout policy in Turkish capital markets.

Design/methodology/approach

Using a sample of 67 non-financial companies listed on Borsa Istanbul 100 index from 2013 to 2018, this study examines the influence of board demographic diversity on dividend payout policies in Turkish capital markets. The authors also create a Demographic Board Diversity Index (DBDI) to estimate the composite cognitive diversity. The authors use dividend payment probability, dividend payout ratio, and dividend yield to measure the dividend policy and employ panel logit and tobit regression models.

Findings

The results indicate that diversity in nationality, experience and educational background play an influential role in encouraging companies to pay high dividends, while gender, tenure and age diversity are insignificant in affecting dividend payments. The findings also suggest that the DBDI positively affects the companies in formulating the dividend payout policies. Finally, the findings show that the family-owned companies with diverse board members have a negative influence on dividend payment intensity.

Originality/value

The results offer valuable insights for companies and policymakers in emerging markets to develop a more refined governance structure accommodating board demographic diversity attributes to mitigate agency conflicts between controlling and minority shareholders through setting up effective dividend payout policies.

Citation

Khan, A., Yilmaz, M.K. and Aksoy, M. (2022), "Does board demographic diversity affect the dividend payout policy in Turkey?", EuroMed Journal of Business, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/EMJB-01-2022-0019