A tale of two revolutions: Environmental, social, and governance performance and dividend policy in Egyptian-listed companies during unstable times

This study assesses the relationship between environmental, social, and governance (ESG) performance and dividend policy in Egypt. Based on a sample of companies listed on Standard and Poor’s Egyptian Exchange ESG index from 2007 to 2018, we investigate the association between ESG scores and dividend payouts in the Egyptian context and find a significant positive relationship between the two. In addition, we assess the impact of each of the three periods Egypt went through from 2007 to 2018 on dividend payouts: the pre-revolution period (2007–2010), the revolution period (2011–2013), and the post-revolution period (2014–2018). Based on industry fixed effects models in the main tests and industry–firm fixed effects and entropy-balanced models in the robustness tests, we find that, during the pre-revolution and revolutionary periods, companies paid higher dividends compared with the post-revolution period, when dividends paid were significantly less. Moreover, companies with high ESG scores paid more dividends pre-revolution and significantly less during the revolutionary period. This study contributes to the literature by providing evidence on how political uncertainty interplays with ESG and dividends, especially in Egypt and in emerging economies. Overall, our findings carry valuable theoretical, practical, and social implications.