The relationship between demographic board diversity and dividend policy: Empirical evidence from Turkey

This study investigates the impact of demographic board diversity attributes, i.e., gender, nationality, experience, educational level, tenure, and age, on dividend policy of 67 non-financial companies listed on Borsa Istanbul 100 index from 2013 to 2018. It also assumes the composite of all diversity attributes to create a demographic board diversity index (DBDI) for cognitive diversity. The study uses alternative dividend policy measures to conduct the analysis, i.e., the probability of paying dividends, dividend payout, and dividend yield through logit, probit, and Tobit regression models. The findings indicate that diversity in experience, educational background, and tenure among the board members play a critical role in encouraging companies to pay a high dividend. In contrast, diversity in gender, nationality, and age is insignificant in influencing dividend payments. Furthermore, the DBDI positively affects the companies in formulating their dividend policies. These results offer valuable insights for companies and policymakers to develop a governance structure accommodating demographic board diversity attributes among board members to mitigate conflicts between controlling and minority shareholders through effective dividend policies and sustainable corporate performance.