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

Authors: Hussain Tahir; Mahfuzur Rahman; Md. Abdul Kaium Masud; Md. Harun Ur Rashid

Addresses: Muhammad Nawaz Sharif University of Engineering and Technology, Old Bahawalpur Road, Qasim Pur Colony Qasimpur Colony, Multan, Punjab, Pakistan ' Department of Finance and Economics, University of Sharjah, Sharjah, UAE ' Department of Business Administration, Noakhali Science and Technology University, Noakhali-3814, Bangladesh ' School of Business and Law, Edith Cowan University, 270 Joondalup Drive, Joondalup, Western Australia, Australia; Department of Economics and Banking, International Islamic University, Chittagong (IIUC), Kumira, Chattogram – 4318, Bangladesh

Abstract: 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.

Keywords: dividend payout; corporate board characteristics; Bursa Malaysia; research & development; R&D; financial leverage.

DOI: 10.1504/AAJFA.2025.149793

Afro-Asian Journal of Finance and Accounting, 2025 Vol.15 No.6, pp.775 - 796

Received: 19 Sep 2022
Received in revised form: 05 Oct 2023
Accepted: 29 Dec 2023
Published online: 13 Nov 2025 *

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