Does CEO gender impact dividends in emerging economies?

The aim of this paper is to understand the perspective of female CEOs regarding corporate dividend decisions in the context of two large emerging economies, India and China. The study is based on listed firms from NIFTY 500 index and CSI 300 index over the period 2010 to 2021 from India and China, respectively. The study considers a total of 5,269 firm-year observations with 3,293 panel observations based on India and 1,976 observations based on China. Ordinary least squares (OLS) regression has been employed along with industry and year fixed effects. As robustness tests, we employ system GMM and lagged variables to confirm our findings. The findings depict the tendency of female CEOs to avoid dividend payments in Indian sample firms, highlighting a substitution effect between gender diversity and dividends. Female CEOs ameliorate corporate governance and discipline managers, and hence, the need to pay dividends to mitigate agency conflicts reduces. However, we find no significant impact in case of Chinese listed firms. Moreover, in a pioneer approach, the results depict that this decision does not harm the operating and market performance of the firm, and therefore, is in line with the goal of shareholders’ wealth maximization. The results remain consistent to more robust estimation techniques like GMM and lagged variables estimation. To our knowledge, ours is the first study that investigates the contribution of women CEOs in dividend decisions along with its impact on firm performance in India and China with such a sizeable sample. The study carries significant spill-over effects. It will have a considerable impact on the human resource management (HRM) practices with respect to diversity and inclusion. Moreover, it will help investors to make better decisions when investing in firms led by women, especially in developing and emerging economies.