Boardroom in GCC and dividends: the reflection of gender, nationality, experience and political connections

Purpose This paper aims to examine the impact of board diversity (i.e. gender diversity, banker diversity, international diversity and royal diversity) on the dividend payouts (DP) in the Gulf Cooperation Council (GCC) capital markets. Design/methodology/approach The sample comprised 984-year observations for GCC non-financial firms representing six different countries. The analysis was performed over eight financial years from 2009 to 2016. Board diversity was measured using BLAU index of heterogeneity and the DP was measured using two proxies to safeguard against the sensitivity of prediction against different measures. Instrumental variable method using 2SLS was found to be more appropriate than the use of panel regressions. The potential endogeneity arises from reverse causality was addressed and the endogenous variable in the regression models was instrumented by valid and strong instrumental variables. Findings The results showed that royal diversity was found to be negative and significant predictor for DP. However, gender diversity, international diversity and banker diversity are insignificant predictors of DP. The results indicate that royal family members on board is an influential factor in DP decision for the listed firms in GCC countries. Research limitations/implications This study was limited to non-financial firms in the GCC capital markets from 2009 to 2016. Based on its findings, a set of recommendations has been provided to various stakeholders, including but not limited to potential investors, shareholders, government regulators and listed companies in GCC countries. Originality/value This study is one of few empirical attempts to investigate the impact of board diversity and DP in a unique setting that is characterized by low representation of gender diversity and with high concentration of family and royal ownership.