Influence of Composition of the Board of Directors on the Payout Policy

Nowadays, there is no consensus on the effect of board composition on payout policy. By board composition we mean gender composition, background composition and the size of the board itself. There are studies that point out the positive association of board gender diversity, board background diversity and the board size with the size of dividend payouts, probability of dividend payouts and probability of share repurchases. But at the same time, there are studies that point out the negative association. In Russia, the influence of board composition on payout policy is not investigated in detail. This paper looks at the relationship between gender composition, background composition, the board size and the size of dividends in Russia. Also, the influence of board gender diversity on the probability of dividend payout vs share repurchase is considered. This is done on the sample of 93 listed Russian firms over the 4-year period (2015-2018). Our results of a panel study show that gender diversity (measured by the number/proportion of women on board) is positively associated with the size of dividends, background diversity (measured as the number/proportion of foreigners on board) is also positively associated with the level of dividends. However, the influence of board size on the size of dividends is not found to be statistically significant. The gender diversity is statistically significant and positively associated with the probability of dividend payout, while there is no significant statistical association of the gender diversity and probability of share repurchase. The following implications of the obtained results can be named: the more diversified the board of directors is, the larger dividends the company pays, and the more gender diversified the board of directors is, the more likely is the company to pay dividends.