Balancing ecology and finance: The impact of carbon performance on dividend payout policy

Ramzi Benkraiem, Olfa Berrich, Nadia Lakhal, Hamza Nizar and Faten Lakhal

Research in International Business and Finance, 2025, vol. 74, issue C

Abstract: This paper investigates the effect of corporate carbon performance on the dividend payout policy. Based on an international sample from 2010 to 2022, the results show that firms that emit less carbon pay more dividends to their shareholders suggesting that managers are likely to balance all stakeholders’ needs. However, companies distribute less dividends following the Paris Agreement in 2015. This result suggests that the increased pressure on companies to engage in sustainability initiatives can reduce the amount of profit available for dividends. Furthermore, the positive effect of carbon performance on dividend payout policy is accentuated for companies with strong profitability and high corporate governance quality. Nevertheless, this positive effect is less prevalent in companies under highly competitive pressure.

Keywords: Dividend policy payout; Carbon performance; Paris agreement; Corporate governance; Industry competitive pressure (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:74:y:2025:i:c:s0275531924005038

DOI: 10.1016/j.ribaf.2024.102710

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