ESG performance and dividend payout: A channel analysis

Seda Bilyay-Erdogan, Gamze Ozturk Danisman and Ender Demir

Finance Research Letters, 2023, vol. 55, issue PA

Abstract: This paper investigates the impact of environmental, social, and governance (ESG) performance on corporate dividend policy. We employ a panel data set comprised of 1094 non-financial listed firms in 21 European countries from 2002 to 2019. We show that companies with higher ESG performance are likely to pay higher dividends. Our results are robust to alternative variable definitions and specifications and address endogeneity concerns. We next investigate the possible transmission channels through which corporate ESG performance enhances dividend payouts. We present novel evidence that "earnings" and "risk" are the two possible channels through which ESG performance augments corporate dividends.

Keywords: ESG performance; Dividend payout; Channel analysis; Europe (search for similar items in EconPapers)
JEL-codes: G3 G35 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323002003

DOI: 10.1016/j.frl.2023.103827

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