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Esg, Corporate Dividend Policy, and the Moderating Role of Industry Growth

  • Nov 3, 2025
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Abstract Book of the 10th International Conference on Research in Business, Management and Economics

Year: 2025

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Esg, Corporate Dividend Policy, and the Moderating Role of Industry Growth

Hang Le, Jo-Yu Wang

ABSTRACT:

The importance of industry growth in the relationship between Environmental, Social, and Governance (ESG) and corporate dividend policy has received little attention in empirical studies. This study investigates whether and how ESG score is related to dividend payout policy, considering the moderating role of industry growth. The sample comprises 1,717 non-financial firms in Taiwan from 2016 to 2024, controlling for firm size, leverage, cash flow, ROA, the ratio of retained earnings to assets, sales growth, Tobin’s Q, R&D expenditure, volatility, idiosyncratic volatility, tangibility and firm age. We find that ESG positively influences the decision to distribute dividends. Regarding the magnitude of payouts conditional on the dividend payment decision, the positive association between ESG and dividend payout – proxied by the dividend-to-assets ratio (DTA) and cash dividend yield (CDY) – is stronger in expanding industries and weaker in declining sectors. Furthermore, when analyzing the individual components of ESG – Environmental, Social and Governance scores – while accounting for industry growth, Social score consistently and strongly promotes payouts, Governance score has a partial effect (mainly on DTA), and Environment score exhibits negligible effects, with only marginal significance for CDY. These findings are robust to another alternative measurement method for dividend payout – dividend-to-sales ratio. Overall, the study emphasizes that the relationship between ESG and dividend policy is contingent on industry growth, providing valuable insights for managers and stakeholders in making informed dividend-related decisions.

Keywords: Cash Dividends; Corporate Social Responsibility; Dividend Payout Ratio; Environment; Governance