How gender diversity shapes the influence of ESG on dividend policy: Insights from the corporate boards in an emerging market

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Abstract

The paper addresses the relationship between environmental, social, and governance (ESG) performance and dividend policy, emphasizing how gender diversity on corporate boards moderates this link. In the context of Indonesia’s emerging market, it explores the challenges of balancing financial returns with sustainability objectives. This study contributes to the growing literature on the importance of board diversity for sustainability (Arnardottir et al., 2023; Alotaibi & Al-Dubai, 2024). Using logistic regression on panel data from firms listed on the Indonesia Stock Exchange (IDX) (2017–2022 years), the findings reveal that ESG performance positively impacts dividend policy, with companies demonstrating higher ESG commitments being more likely to pay dividends. However, the positive effect is weakened when boards have greater female representation, as these boards often prioritize reinvestment in sustainability initiatives over immediate dividend payouts. The study concludes that gender-diverse boards encourage a strategic focus on long-term sustainability, balancing the financial implications of ESG practices with broader ethical governance and stakeholder needs. Additional analysis compares ESG practices, board gender diversity, and dividend payments before and after the pandemic, revealing their evolving impact on corporate financial decisions.

Keywords: Environmental, Social, and Governance, ESG, Gender Diversity, Dividend Policy, Corporate Governance, Agency Theory, Stakeholder Theory

Authors’ individual contributions: Conceptualization — T.N.; Methodology — T.N.; Validation — T.N.; Data Curation — J.A.A.M.; Writing — Original Draft — J.A.A.M.; Writing — Review & Editing — T.N.; Visualization — J.A.A.M.; Supervision — T.N.; Project Administration — T.N.; Funding Acquisition — T.N.

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

JEL Classification: G32, G34, G35, M14, Q56

Received: 25.08.2024
Accepted: 28.04.2025
Published online: 30.04.2025

How to cite this paper: Muttaqi, J. A. A., & Nur, T. (2025). How gender diversity shapes the influence of ESG on dividend policy: Insights from the corporate boards in an emerging market. Corporate Board: Role, Duties and Composition, 21(1), 71–81. https://doi.org/10.22495/cbv21i1art7