Firm's ESG orientation, Dividend Policy, and the COVID-19 Pandemic: An empirical investigation

Abstract/Description

This paper investigates the role of a firm’s orientation towards environmental, social, and governance (ESG) issues in its dividend policy during the extremely stressed period of the COVID-19 pandemic. Using firms’ data from 33 countries, results show that ESG orientation does play a significant role in dividend policy. Specific to COVID-19, even though the dividend-paying capacity of firms reduced significantly, environment-friendly firms have shown a higher propensity to pay a dividend during the pandemic. Furthermore, conditional upon payment decision, the level of environmental performance also plays a positive role in the volume of dividend payment. Overall, results show that environmental performance has more relevance in dividend policy as compared to social and governance aspects of ESG framework. These findings have important policy implications for investors, managers, and other stakeholders of firms

Track

Finance

Session Number/Theme

Session 1B: Finance

Session Chair

Dr. Sana Tauseef ; Dr. Mohsin Khawaja

Start Date/Time

26-5-2023 2:45 PM

End Date/Time

26-5-2023 4:45 PM

Location

MCS-4, Aman-CED, First Floor, Institute of Business Administration, Karachi

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May 26th, 2:45 PM May 26th, 4:45 PM

Firm's ESG orientation, Dividend Policy, and the COVID-19 Pandemic: An empirical investigation

MCS-4, Aman-CED, First Floor, Institute of Business Administration, Karachi

This paper investigates the role of a firm’s orientation towards environmental, social, and governance (ESG) issues in its dividend policy during the extremely stressed period of the COVID-19 pandemic. Using firms’ data from 33 countries, results show that ESG orientation does play a significant role in dividend policy. Specific to COVID-19, even though the dividend-paying capacity of firms reduced significantly, environment-friendly firms have shown a higher propensity to pay a dividend during the pandemic. Furthermore, conditional upon payment decision, the level of environmental performance also plays a positive role in the volume of dividend payment. Overall, results show that environmental performance has more relevance in dividend policy as compared to social and governance aspects of ESG framework. These findings have important policy implications for investors, managers, and other stakeholders of firms