Exploring the impact of fintech innovation on dividend payout decisions: the roles of intellectual capital and board characteristics

Abstract

Purpose

We empirically investigate the impact of fintech innovation on dividend payout (DP) decisions. In addition, we also examine the mediated and moderated role of intellectual capital (IC) and board characteristics (BC) respectively in the fintech innovation-DP relationship.

Design/methodology/approach

Using a sample of 9,441 firm-year observations over the period 2014–2022, we develop a structural model that encompasses fintech innovation, IC, BC and DP decisions. We utilize fixed effects regression to empirically test the model. A battery of tests such as the two-step Generalized Method of Moment, Heckman’s two-stage selection correction and Difference-in-Difference regression are used to check the robustness and sensitivity of the estimates.

Findings

Our results suggest that fintech innovation significantly and positively impacts DP decisions and IC partially mediates the fintech innovation–DP relationship. In addition, BC such as independence, age and gender diversity are found to moderate this relationship.

Originality/value

This study’s originality lies in its micro-level analysis of the impact of fintech innovation on DP decisions, considering a novel firm-level innovation metric derived from patent applications. To our knowledge, no previous work has empirically examined the mediating role of IC and the moderating influence of BC in the fintech innovation–DP relationship, offering a unique perspective on the complex interactions shaping dividend policies in the digital era.

Citation

Baig, M.H., Xu, J., Shahzad, F., Rehman, I.U. and Ali, R. (2024), "Exploring the impact of fintech innovation on dividend payout decisions: the roles of intellectual capital and board characteristics", International Journal of Emerging Markets, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOEM-05-2024-0780