Income investors now have a selfish reason for pushing for more gender diverse corporate boards -- they result in higher dividend payments.
That’s the conclusion of academics including Chen Xiao of The Chinese University of Hong Kong, Shenzhen, who found a significant positive relationship between board gender diversity and both the likelihood and level of dividend payments. Their results were published in the October edition of the Journal of Corporate Finance.
“Using various measures of board gender diversity, our results generally support the proposition that a gender-diverse board is more likely to pay a dividend compared to a single-gender all-male board,” they wrote. “Moreover, ﬁrms with higher board gender diversity tend to pay larger dividends.”
The paper adds to research showing the corporate benefits of gender diversity. Asian companies with more women board members achieved better financial results than those dominated by men, according to a study by the International Finance Corp. Stanford Graduate School of Business found positive share price effects from greater workforce diversity.
Women directors are more associated with good corporate governance and are more inclined to promote the interests of all shareholders, the researchers hypothesized in this latest study of 8,876 companies from 22 countries from 2000 to 2013. This promotes the payout of dividends, they said.
“Studies suggest that gender diverse boards are more likely to make well-reasoned decisions and more inclined to promote shareholders’ interests,” they wrote. Consequently, they “are more inclined to initiate dividends and set higher dividend payout ratios.”
The Bloomberg Gender-Equality Index, a gauge tracking global companies recognized for best-in-class diversity policies, has risen about 19% this year, outperforming the 15% gain in the MSCI AC World Index.
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