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ESG performance and dividend payout: A channel analysis

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  • Bilyay-Erdogan, Seda
  • Danisman, Gamze Ozturk
  • Demir, Ender

Abstract

This paper investigates the impact of environmental, social, and governance (ESG) performance on corporate dividend policy. We employ a panel data set comprised of 1094 non-financial listed firms in 21 European countries from 2002 to 2019. We show that companies with higher ESG performance are likely to pay higher dividends. Our results are robust to alternative variable definitions and specifications and address endogeneity concerns. We next investigate the possible transmission channels through which corporate ESG performance enhances dividend payouts. We present novel evidence that "earnings" and "risk" are the two possible channels through which ESG performance augments corporate dividends.

Suggested Citation

  • Bilyay-Erdogan, Seda & Danisman, Gamze Ozturk & Demir, Ender, 2023. "ESG performance and dividend payout: A channel analysis," Finance Research Letters, Elsevier, vol. 55(PA).
    • Handle: RePEc:eee:finlet:v:55:y:2023:i:pa:s1544612323002003
    DOI: 10.1016/j.frl.2023.103827
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    More about this item

    Keywords

    ESG performance; Dividend payout; Channel analysis; Europe;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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