Corporate governance, corporate social responsibility, and dividends in Europe

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Abstract

This study analyses whether corporate social responsibility (CSR) initiatives, corporate governance, and payment of dividends procedures intersect in European businesses. This study seeks to share insight into the intricate relationship between CSR and dividend distribution, concentrating on the European market. This paper looks at how corporate governance integrity influences the selection of dividends and how CSR practices affect those decisions. To understand this aspect more clearly, the European firms operating in the industrial and services sectors have been considered. The sample size of 360 firms operating in 10 European countries (Austria, Finland, Italy, Denmark, Germany, France, Luxembourg, Portugal, the Netherlands, and Switzerland) is considered. Variables such as CSR, board size, board meetings, board independence, firm size, and profitability (return on assets, ROA) have been used as independent variables, and the dividend payout ratio (DPR) has been used as the dependent variable. The findings have indicated that the DPR within European firms has been impacted widely due to CSR, firm size, board size and profitability, while no significant influence is there of board independence and meetings. Therefore, based on the findings, it is concluded that CSR has a significant impact on dividend payout, with corporate governance performing some role in the process.

Keywords: Corporate Social Responsibility, Corporate Governance, Dividends, Tobit Regression, Europe

Authors’ individual contribution: Conceptualization — M.K. and B.A.K.; Methodology — M.K. and B.A.K.; Software — M.K. and B.A.K.; Validation — M.K. and B.A.K.; Formal Analysis — M.K. and B.A.K.; Investigation — M.K. and B.A.K.; Resources — M.K.; Data Curation — B.A.K.; Writing — Original Draft — M.K. and B.A.K.; Writing — Review & Editing — M.K. and B.A.K.; Supervision — M.K. and B.A.K.; Project Administration — M.K. and B.A.K.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G32, L21, M14, O16

Received: 08.11.2023
Accepted: 26.01.2024
Published online: 30.01.2024

How to cite this paper: Ktit, M., & Khalaf, B. A. (2024). Corporate governance, corporate social responsibility, and dividends in Europe. Corporate Ownership & Control, 21(1), 39–46. https://doi.org/10.22495/cocv21i1art4