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Corporate governance and dividend pay-out policy in UK listed SMEs

Mohamed Elmagrhi Orcid Logo, Collins G. Ntim, Richard M. Crossley, John K. Malagila, Samuel Fosu, Tien V. Vu

International Journal of Accounting & Information Management, Volume: 25, Issue: 4, Pages: 459 - 483

Swansea University Author: Mohamed Elmagrhi Orcid Logo

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DOI (Published version): 10.1108/ijaim-02-2017-0020

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 analys...

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Published in: International Journal of Accounting & Information Management
ISSN: 1834-7649 1758-9037
Published: Emerald 2017
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URI: https://cronfa.swan.ac.uk/Record/cronfa53270
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.
Keywords: Corporate governance, Corporate board characteristics, Dividend pay-out policy, Outcome versus substitution hypothesis, UK-listed SMEs
College: Faculty of Humanities and Social Sciences
Issue: 4
Start Page: 459
End Page: 483

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