Board characteristics and dividend payout decisions: evidence from Indonesian conventional and Islamic bank
ISSN: 0307-4358
Article publication date: 16 May 2023
Issue publication date: 24 October 2023
Abstract
Purpose
This study attempts to examine the relationship between board characteristics and dividend payout decisions of conventional and Islamic banks.
Design/methodology/approach
This study employed unbalanced panel data of both Indonesian conventional and Islamic banks over the period 2008–2021, estimated using tobit and logit models. Dividend payout decisions were measured using the dividend payout ratio and probability to pay dividends. Meanwhile, board characteristics were represented by board size, board independence, board gender diversity, board meeting, board chairman tenure and board chairman tenure.
Findings
The results show that, in the context of conventional banks, board meetings, board chairman tenure and board chairman tenure are correlated with higher dividend payout decisions, while board gender diversity indicates lower dividend payout decisions. On the other hand, in the context of Islamic banks, board size and board meetings are associated with higher dividend payout decisions, while board independence and board chairman tenure are related to lower dividend payout decisions.
Research limitations/implications
This study fills the gaps in the literature on bank dividend policy. It also provides additional insights regarding the relationship between board characteristics and dividend payout decisions in the context of conventional and Islamic banks. In addition, this study gives essential contributions to regulators and investors of both banks, especially in a developing country, Indonesia.
Originality/value
This study is one of the first to provide empirical results regarding the relationship between board characteristics and dividend payout decisions of conventional and Islamic banks. Board characteristics are indicated as one of the fundamental factors that determine dividend payout decisions of both conventional and Islamic banks in Indonesia.
Keywords
Citation
Mai, M.U., Djuwarsa, T. and Setiawan, S. (2023), "Board characteristics and dividend payout decisions: evidence from Indonesian conventional and Islamic bank", Managerial Finance, Vol. 49 No. 11, pp. 1762-1782. https://doi.org/10.1108/MF-11-2022-0541
Publisher
:Emerald Publishing Limited
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