TY - JOUR
T1 - Do Shareholders Fight for Firm Value or Market Value in Emerging Markets? The Mediating Effect of Board Structure Dynamics on Dividend Policy Decision
AU - Ofori-Sasu, Daniel
AU - Abor, Joshua Yindenaba
AU - Quaye, Sydney
N1 - Publisher Copyright:
© 2019 The Authors. African Development Review © 2019 African Development Bank
PY - 2019/12/1
Y1 - 2019/12/1
N2 - The paper examines the mediating effect of board structure dynamics on the relationship between dividend payout and shareholders’ wealth at the firm level and market level. Panel regression models are used by applying data from 27 listed firms in Ghana between 2010 and 2017. We find that board structure dynamics have a direct effect on shareholders’ wealth at both levels. However, the results reveal new evidence that board structure dynamics play a mediating role on the relationship between dividend policy decision and shareholders’ wealth only at the market level. We find that independent directors and CEO duality significantly reduce market value of shareholders through dividend payout decision. However, independent directors and longer CEO tenure in office mediate a positive effect on the relationship between dividend policy and shareholders’ wealth at the market level. Thus, the mediating effect of board structure dynamics, particularly independent directors and CEO tenure, are important in predicting a positive relationship between dividend policy and shareholders’ wealth at the market level than at the firm level. Therefore, regulatory bodies and investors should provide strong board structure dynamics that serve as a mediating mechanism for prudent dividend policy decisions that add value to shareholders’ wealth.
AB - The paper examines the mediating effect of board structure dynamics on the relationship between dividend payout and shareholders’ wealth at the firm level and market level. Panel regression models are used by applying data from 27 listed firms in Ghana between 2010 and 2017. We find that board structure dynamics have a direct effect on shareholders’ wealth at both levels. However, the results reveal new evidence that board structure dynamics play a mediating role on the relationship between dividend policy decision and shareholders’ wealth only at the market level. We find that independent directors and CEO duality significantly reduce market value of shareholders through dividend payout decision. However, independent directors and longer CEO tenure in office mediate a positive effect on the relationship between dividend policy and shareholders’ wealth at the market level. Thus, the mediating effect of board structure dynamics, particularly independent directors and CEO tenure, are important in predicting a positive relationship between dividend policy and shareholders’ wealth at the market level than at the firm level. Therefore, regulatory bodies and investors should provide strong board structure dynamics that serve as a mediating mechanism for prudent dividend policy decisions that add value to shareholders’ wealth.
UR - http://www.scopus.com/inward/record.url?scp=85076432727&partnerID=8YFLogxK
U2 - 10.1111/1467-8268.12401
DO - 10.1111/1467-8268.12401
M3 - Article
AN - SCOPUS:85076432727
SN - 1017-6772
VL - 31
SP - 409
EP - 422
JO - African Development Review
JF - African Development Review
IS - 4
ER -