BOARD DYNAMICS, OWNERSHIP, AND DIVIDEND POLICY: TOBIT MODEL EVIDENCE FROM BANGLADESHI COMMERCIAL BANKS

Abstract

Dividend payout decisions in commercial banks are closely associated with board composition and ownership structure. However, the direction and magnitude of these relationships remain uncertain, particularly in emerging economies characterized by concentrated ownership and evolving corporate governance frameworks. In Bangladesh, where the banking sector plays a central role in the financial system and operates under stringent regulatory oversight, understanding the governance determinants of dividend payout represents an important empirical issue. This study examines the effects of board composition and ownership structure on the dividend payout policy of listed commercial banks in Bangladesh. The analysis uses panel data from 19 listed commercial banks, covering the period from 2017 to 2023, yielding 133 firm-year observations. A Tobit regression model is applied to account for the censored nature of dividend payout ratios and to estimate the relationships between governance characteristics and dividend policy. The results indicate a statistically significant model (F = 8.34, p < .01). Dividend payout is positively influenced by board size (1.786, p < .05), board independence (1.360, p < .05), and board meeting frequency (0.951, p < .05), while gender diversity (−0.850, p < .01) negatively influences it. For ownership structure, state ownership (−1.344, p < 01) and foreign ownership (−1.100, p < .05) decrease dividend payout. In contrast, institutional ownership and insider ownership are statistically insignificant (p > .1). Overall, the findings demonstrate that board composition and ownership structure contribute to variations in dividend payout among Bangladeshi listed commercial banks over the study period.