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Untying the role of board gender diversity in dividend policy of politically embedded Chinese firms

Riffat Shaheen (Department of Finance, Economic and Management School, Wuhan University, Wuhan, China)
Qi Luo (Department of Finance, Economic and Management School, Wuhan University, Wuhan, China)
Hussaini Bala (Department of Accounting, Faculty of Administrative Sciences and Economics, Tishk International University, Erbil, Iraq)

Journal of Applied Accounting Research

ISSN: 0967-5426

Article publication date: 31 May 2022

Issue publication date: 13 January 2023

470

Abstract

Purpose

This study aims to investigate the role of board gender diversity (BGD) in dividend payout decisions of politically embedded firms (PEFs) including government-linked firms (GLFs) and non-GLFs in comparison to non-PEFs from the perspective of an emerging market, China.

Design/methodology/approach

The study uses the fixed-effect regression to examine the relationship between BGD and dividend payout decisions of PEFs including GLFs and non-GLFs in comparison to non-PEFs for a sample of Chinese publicly listed firms over the period 2010–2018.

Findings

The paper presents robust evidence that BGD is associated with higher dividend payments in PEFs than non-PEFs. Similarly, female directors on GLFs' boards are more likely to pay higher dividends than non-GLFs. Moreover, findings also reveal that the female directors' impact on dividend payout decisions is more pronounced in high corporate social responsibility (CSR) PEFs compared to low CSR peers, regardless of the nature of political ties.

Research limitations

The major limitation of this research that it is restricted to Chinese firms that operate under distinctive economic, social, and political environments. However, the study findings are generalizable to other emerging economies which have similar institutional settings and corporate environments with high government intervention like China.

Practical implications

The findings will enable policymakers to design policies targeted at the inclusion of female directors on PEFs' boards to reduce information asymmetry and agency conflicts. However, considering the heterogeneity of female directors' role in dividend payout decisions of GLFs and non-GLFs, the policymakers should be cautious while establishing the female quota in these firms.

Originality/value

The role of BGD in dividend policy decisions of politically connected firms remained unexplored. This study is the first to unveil the role of female directors in dividend payout decisions of PEFs and non- PEFs. In addition, this research further contributes to the literature by exploring the BGD-dividend policy link in PEFs with high- and low-CSR engagements.

Keywords

Citation

Shaheen, R., Luo, Q. and Bala, H. (2023), "Untying the role of board gender diversity in dividend policy of politically embedded Chinese firms", Journal of Applied Accounting Research, Vol. 24 No. 1, pp. 170-198. https://doi.org/10.1108/JAAR-11-2021-0301

Publisher

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Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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