Impact of environmental, social and governance disclosure on dividend policy: What is the role of corporate governance? Evidence from an emerging market

Abstract This study examines the nexus between environmental, social, and governance (ESG) disclosure and dividend policy by considering the major role of corporate governance. The sample consists of companies traded in the UAE financial markets during the period 2010–2020. Using data collected from Bloomberg and applying panel data regressions, the results indicated a positive relationship between ESG and dividend payouts. In addition, the results reveal that board of directors' independence is a mediator in the relationship between ESG disclosure and dividend payout, whereas institutional ownership and foreign ownership play a negative and positive moderating role between ESG and dividend payout, respectively. The findings could help UAE financial regulators integrate ESG information into the reporting process, implement effective corporate governance mechanisms to provide accurate information to shareholders, and manage their portfolios more efficiently. This study is the first to examine the relationship between ESG disclosure and dividend policies by considering corporate governance, and contributes to a better understanding of the financial impact of ESG disclosure on dividend policy.