Corporate governance and dividend pay-out policy in UK listed SMEs: The effects of corporate board characteristics

Date

2017-10-07

Advisors

Journal Title

Journal ISSN

ISSN

1834-7649

Volume Title

Publisher

Emerald Publishing Limited

Type

Article

Peer reviewed

Yes

Abstract

Purpose: This paper examines 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 (SMEs) from 2010 to 2013 listed on the Alternative Investment Market.

Design/methodology/approach: The data is analysed by employing multivariate regression techniques, including estimating fixed effects, lagged effects and two-stage least squares regressions.

Findings: The 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 has 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/value: This 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.

Description

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.

Keywords

corporate governance, corporate board characteristics, dividend pay-out policy, UK listed SMEs, outcome versus substitution hypothesis

Citation

Elmagrhi, M.H., Ntim, C.G., Crossley, R.M., Malagila, J.K., Fosu, S. and Vu, T.V. (2017) Corporate governance and dividend pay-out policy in UK listed SMEs: The effects of corporate board characteristics. International Journal of Accounting & Information Management, 25(4), pp.459-483.

Rights

Research Institute

Finance and Banking Research Group (FiBRe)