Board gender diversity and dividend payout: The critical mass and the family ties effect

Emma García-Meca, Félix López-Iturriaga () and Domingo Javier Santana-Martín

International Review of Financial Analysis, 2022, vol. 79, issue C

Abstract: We analyse the relationship between female directors and payout policy for a sample of non-financial Spanish listed firms. Based on the critical mass theory, we find an inverted-U shaped relationship. For low levels of female representation in the board, women directors increase dividends in order to reduce agency conflicts, and improve reputation or legitimacy. However, after an inflection point, characteristics traditionally associated to women, such as risk aversion, a conservative and prudent financial attitude, and lower overconfidence emerge and reduce dividend payments. Moreover, our results suggest that female directors play a very different role with the controlling shareholder, depending on what family ties exist. Women directors who have family connections with the dominant shareholder exhibit the same inverted-U shaped relationship with dividends. In contrast, for female directors with no family ties, the relationship with dividends is U-shaped. Our results show the faultlines within the group of female directors depending on the relationship with the family owners, and that the influence of non-family female directors only arises when this group of women gain enough power, visibility, authority, and legitimacy.

Keywords: Boards of directors; Dividend payout; Family firms; Female directors; Family ties (search for similar items in EconPapers)
JEL-codes: G34 G35 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:79:y:2022:i:c:s1057521921002891

DOI: 10.1016/j.irfa.2021.101973

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