Multiple directorships and dividends in Spanish listed firms

Abstract

This study analyzes the impact of directors belonging to several boards (multiple directorships) on the dividend policy of firms. As the composition of a board has an impact on its effectiveness and the quality of corporate governance, this study focuses on the presence of multiple directorships. Theoretically, the literature presents two competing hypotheses regarding the impact of this type of directorship on firm performance—reputation and dedication hypotheses. Based on a sample of nonfinancial companies listed on the Spanish stock market from 2008 to 2019, the study finds that a greater presence of multiple directorships increases the propensity of firms to pay dividends, as well as the level of cash dividends, supporting the reputation hypothesis. In addition, we find that ownership concentration moderates the relationship between multiple directorships and dividends.