The influence of board foreign directors on dividend payout in GCC non-financial firms

Purpose This study examines the effect of foreign directors on dividend payout in non-financial firms within the Gulf Cooperation Council (GCC) countries, given the research goal of exploring how internationalization of board culture affects firms’ dividends policies. Design/methodology/approach The research adopts a quantitative research approach and analyzes a sample of 2,692 firm-year observations across 281 non-financial firms from 2010 to 2020. The methodology includes pooled regression, fixed effects, generalized least squares (GLS), and two-stage least squares (2SLS) to assess the impact of the presence of foreign directors on dividend payout. Findings The results indicate that the presence and the proportion of foreign directors have a significant positive impact on dividend payout ratios. Firms with board members from other countries have higher dividend payout ratios. Research limitations/implications The study is limited to non-financial firms in the GCC due to the distinct regulatory frameworks and financial reporting structures of financial and utility sectors, which warrant separate treatment. While this exclusion ensures methodological consistency, future research could explore comparative analyses across sectors using adjusted models or sector-specific controls, and incorporate other board diversity dimensions such as ethnicity, age and gender. Originality/value This research contributes to the limited but growing body of literature on the effects of board foreign directors in emerging markets, particularly within the GCC. It provides empirical evidence that supports the inclusion of foreign directors for enhancing corporate governance and strategic financial outcomes, offering valuable insights for policymakers and firms interested in governance improvements and international investment attraction.