Mediating role of research and development and financial leverage on the relationship between corporate board characteristics and dividend payout policy

The study investigates the mediating effect of research and development (R&D) and financial leverage on the relationship between corporate board characteristics (diversity, size, tenure) and dividend payout. The study uses structural equation modelling to analyse data collected from 203 non-financial firms listed on the Bursa Malaysia between 2005 and 2018. The findings revealed a serial partial arbitration effect of R&D and financial leverage on the relationship between board characteristics (board size and board diversity) and dividend payout. Though the outcomes show that financial leverage partially mediates the association between the board of directors' tenure and dividend, R&D fully mediates between board tenure, board diversity, and financial leverage. The findings imply that board characteristics influence the declaration of a sound payout policy which attracts more investment to the stock exchange. The study also offers the policymakers of developing countries valuable insights into how creditors' pressure and investment in R&D influence the board's approach toward dividend payout policy.