A cross-country examination on the relationship between cash holding, dividend policies, and the moderating role of ESG ratings

Figures & data

Table 1. Sample selection.

Number of countries in the initial sample	57
Number of firms in the initial sample	40,363
Firms with missing ESG data	(36,075)
Firms with ESG data	4288
Firms with missing financial data	(2791)
Final sample	1497
Number of countries in the initial sample	53
Firm year observations (i.e. 1497 * 11 years)	16467

Table 2. Tabulation of the study sample.

Country of headquarters	Freq.	Percent	Cum.
Argentina	2	0.01	0.01
Australia	1190	7.23	7.24
Austria	84	0.51	7.75
Belgium	122	0.74	8.49
Bermuda	36	0.22	8.71
Brazil	265	1.61	10.32
Cambodia	1	0.01	10.33
Canada	396	2.41	12.73
Chile	85	0.52	13.25
China	1238	7.52	20.77
Colombia	32	0.19	20.96
Denmark	162	0.98	21.94
Egypt	19	0.12	22.06
Finland	158	0.96	23.02
France	472	2.87	25.89
Germany	496	3.01	28.90
Greece	57	0.35	29.25
Hong Kong	438	2.66	31.91
Hungary	17	0.10	32.01
India	411	2.50	34.51
Indonesia	166	1.01	35.51
Ireland; Republic of	157	0.95	36.47
Israel	31	0.19	36.66
Italy	121	0.73	37.39
Japan	1591	9.66	47.05
Kazakhstan	1	0.01	47.06
Korea; Republic (S. Korea)	561	3.41	50.47
Kuwait	1	0.01	50.47
Luxembourg	37	0.22	50.70
Malaysia	217	1.32	52.02
Malta	9	0.05	52.07
Mexico	194	1.18	53.25
Netherlands	198	1.20	54.45
New Zealand	119	0.72	55.17
Norway	107	0.65	55.82
Peru	17	0.10	55.93
Philippines	96	0.58	56.51
Poland	63	0.38	56.89
Portugal	37	0.22	57.12
Qatar	17	0.10	57.22
Russia	168	1.02	58.24
Saudi Arabia	35	0.21	58.45
Singapore	181	1.10	59.55
South Africa	428	2.60	62.15
Spain	134	0.81	62.97
Sweden	377	2.29	65.26
Switzerland	389	2.36	67.62
Taiwan	316	1.92	69.54
Thailand	74	0.45	69.99
Turkey	145	0.88	70.87
United Arab Emirates	17	0.10	70.97
United Kingdom	1440	8.75	79.72
United States of America	3339	20.28	100.00
Total	16464	100.00

Table 3. Matrix of correlations.

Variables	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)	(9)	(10)	(11)	(12)	(13)	(14)	(15)
DV PAT	1.000
DV YID	0.008	1.000
Cash	−0.004	0.031*	1.000
ESG_Combined	0.006	0.027*	−0.051*	1.000
EPS	0.005	0.026*	−0.042*	0.868*	1.000
SPS	0.012	0.014*	−0.047*	0.623*	0.393*	1.000
GPS	−0.001	0.044*	−0.068*	0.825*	0.736*	0.363*	1.000
Size	−0.006	0.028*	−0.192*	0.380*	0.374*	0.249*	0.500*	1.000
PROF	−0.001	0.005	0.003	0.025*	0.022*	0.020*	0.017*	0.002	1.000
Lev	0.006	−0.003	−0.115*	0.071*	0.081*	0.053*	0.069*	0.251*	0.028*	1.000
Analysts	−0.010	−0.063*	−0.062*	0.328*	0.339*	0.194*	0.355*	0.469*	0.017*	0.017*	1.000
Liq	−0.002	−0.008	0.052*	−0.125*	−0.123*	−0.066*	−0.151*	−0.203*	−0.006	−0.225*	−0.122*	1.000
CapitalEx	0.005	−0.016*	−0.008	0.093*	0.094*	0.060*	0.095*	0.021*	−0.002	−0.019*	0.267*	−0.070*	1.000
BoardSize	−0.008	−0.004	−0.104*	0.202*	0.218*	0.036*	0.298*	0.463*	−0.004	0.082*	0.224*	−0.110*	−0.009	1.000
CEO	−0.014*	−0.066*	−0.075*	−0.001	0.037*	−0.079*	0.024*	0.108*	0.014*	0.058*	0.113*	0.006	0.017*	0.066*	1.000

***p<0.01, **p < 0.05, *p < 0.1.

Table 4. Measurement of the study variables.

Variable	Symbol	Measure
Dependent variables
Dividend payout ratio	DV PAT	The ratio of total dividend to total net income
Dividend yield	DV YID	The ratio of the annual dividend per share to the stock price per share
Independent variables
Cash	Cash	The ratio of cash to net assets
Moderating variables
ESG score	ESG_Combined	The total ESG performance
Environmental Score	EPS	The environmental performance
Social Score	SPS	The social performance
Governance Score	GPS	The governance performance
Control variables
Firm size	Size	The log value of the company’s total assets
Return on equity	PROF	Net income to total equity
Leverage	Lev	Total debt to total assets
Number of analysts	Analysts	The natural logarithm of the total number of firm analysts
Liquidity	Liq	The ratio of current assets to current liabilities
Capital expenditure	CapitalEx	The ratio of total capital expenditure to total assets
Board size	BoardSize	The total number of board members
CEO Duality	CEO	A value of 1 is assigned if the CEO holds a dual function and 0 otherwise.

Table 5. Descriptive statistics.

Variable	Mean	Std. dev.	Min	Max
Dependent variables
DV PAT	.454	.361	0	1.384
DV YID	.025	.018	0	.064
Independent variable
Cash	.254	.44	0	1.541
Moderating variables
ESG_Combined	44.216	19.583	5.404	85.418
EPS	45.593	24.675	.053	98.637
SPS	50.859	22.246	.251	98.723
GPS	39.835	28.247	0	98.872
Control variables
Size	22.198	1.34	19.804	24.744
PROF	15.711	11.522	.223	45.472
Lev	.23	.153	0	.524
Analysts	2.507	.588	1.386	3.401
Liq	1.81	.956	.679	4.351
CapitalEx	.043	.034	0	.125
BoardSize	9.999	2.846	6	16
CEO	.345	.475	0	1

Table 6. The impact of cash holdings on corporate dividends.

	(1)	(2)
Variables	DV PAT	DV YD
Cash	0.168*	0.248**
	[1.81]	[2.25]
Size	0.0443	0.179***
	[0.96]	[4.63]
PROF	0.00528***	0.0116***
	[3.49]	[5.67]
lev	−0.649***	−0.580***
	[−6.48]	[−3.49]
NumberAnalysts	−0.0266	−0.307***
	[−0.36]	[−5.02]
Liq	−0.0715***	−0.0735***
	[−3.37]	[−3.66]
CapitalEx	−1.949***	−1.231
	[−3.04]	[−1.70]
BoardSize	0.00786	0.000838
	[0.55]	[0.07]
CEOduality	−0.178***	−0.256***
	[−3.36]	[−4.50]
Constant	−0.581	−2.701***
	[−0.60]	[−3.18]
Year Fixed effect	Yes	Yes
Industry Fixed effect	Yes	Yes
Observations	16,467	16,467
R-squared	0.043	0.123

The number inside the brackets indicates the T-statistics. ***p < 0.01, **p < 0.05, *p < 0.1.

Table 7. The moderation role of ESG performance on cash holdings-dividends relationship.

	(1)	(2)
Variables	DV PAT	DV YD
Cash	0.0582	0.0561*
	[1.76]	[2.14]
ESG	0.00675***	0.00339***
	[20.11]	[5.30]
ESG * Cash	−0.00182**	−0.00170**
	[−2.73]	[−2.50]
Size	0.0232	0.168***
	[1.74]	[11.93]
PROF	0.00483***	0.0119***
	[6.52]	[13.81]
lev	−0.536***	−0.441***
	[−11.18]	[−8.97]
NumberAnalysts	−0.00449	−0.200***
	[−0.21]	[−5.98]
Liq	−0.0426***	−0.0300***
	[−4.14]	[−4.21]
CapitalEx	−2.027***	−1.457***
	[−11.17]	[−4.44]
BoardSize	0.0263***	0.0190***
	[6.69]	[6.28]
CEOduality	0.0116	−0.000231
	[0.77]	[−0.02]
Constant	−0.569	−5.144***
	[−1.72]	[−18.12]
Year Fixed effect	Yes	Yes
Industry Fixed effect	Yes	Yes
Observations	16,467	16,467
R-squared	0.164	0.252

The number inside the brackets indicates the T-statistics. ***p < 0.01, **p < 0.05, *p < 0.1.

Table 8. The moderation role of social performance on cash holdings-dividends relationship.

	(1)	(2)
Variables	DV PAT	DV YD
Cash	0.0416	0.0499*
	[1.52]	[1.90]
SP	0.00483***	0.00198**
	[17.00]	[3.09]
SP * Cash	−0.00141**	−0.00152**
	[−2.32]	[−2.38]
Size	0.0280*	0.174***
	[2.07]	[11.46]
PROF	0.00482***	0.0120***
	[6.57]	[14.19]
lev	−0.534***	−0.441***
	[−10.84]	[−8.97]
NumberAnalysts	0.00393	−0.193***
	[0.17]	[−5.81]
Liq	−0.0429***	−0.0306***
	[−4.20]	[−4.38]
CapitalEx	−2.075***	−1.476***
	[−11.89]	[−4.45]
BoardSize	0.0244***	0.0183***
	[6.14]	[5.66]
CEOduality	0.00220	−0.00425
	[0.15]	[−0.36]
Constant	−0.592	−5.213***
	[−1.73]	[−16.93]
Year Fixed effect	Yes	Yes
Industry Fixed effect	Yes	Yes
Observations	16,467	16,467
R-squared	0.160	0.251

The number inside the brackets indicates the T-statistics. ***p < 0.01, **p < 0.05, *p < 0.1.

Table 9. The moderation role of governance performance on cash holdings-dividends relationship.

	(1)	(2)
Variables	DV PAT	DV YD
Cash	0.0577*	0.0474
	[2.14]	[1.68]
GP	0.00414***	0.00267***
	[14.55]	[8.15]
GP * Cash	−0.00155***	−0.00127*
	[−3.60]	[−2.16]
Size	0.0386***	0.172***
	[3.24]	[13.13]
PROF	0.00525***	0.0121***
	[7.38]	[13.54]
lev	−0.543***	−0.444***
	[−11.04]	[−8.76]
NumberAnalysts	0.0108	−0.195***
	[0.49]	[−5.79]
Liq	−0.0449***	−0.0309***
	[−4.26]	[−4.25]
CapitalEx	−1.997***	−1.439***
	[−10.91]	[−4.45]
BoardSize	0.0295***	0.0211***
	[7.42]	[7.40]
CEOduality	0.0276	0.0105
	[1.71]	[0.95]
Constant	−0.926**	−5.282***
	[−2.98]	[−19.66]
Year Fixed effect	Yes	Yes
Industry Fixed effect	Yes	Yes
Observations	16,467	16,467
R-squared	0.158	0.252

The number inside the brackets indicates the T-statistics. ***p < 0.01, **p < 0.05, *p < 0.1.

Table 10. The moderation role of environmental performance on cash holdings-dividends relationship.

	(1)	(2)
Variables	DV PAT	DV YD
Cash	0.0581**	0.0590**
	[2.34]	[3.15]
EP	0.00470***	0.00356***
	[17.73]	[7.31]
EP * Cash	−0.00212***	−0.00207***
	[−4.05]	[−4.14]
Size	0.0178	0.155***
	[1.37]	[11.45]
PROF	0.00500***	0.0119***
	[6.87]	[13.43]
lev	−0.529***	−0.432***
	[−11.30]	[−9.08]
NumberAnalysts	0.00324	−0.203***
	[0.15]	[−5.96]
Liq	−0.0425***	−0.0290***
	[−3.95]	[−3.99]
CapitalEx	−2.214***	−1.590***
	[−12.93]	[−5.04]
BoardSize	0.0239***	0.0172***
	[5.96]	[5.31]
CEOduality	0.00206	−0.00646
	[0.13]	[−0.57]
Constant	−0.254	−4.770***
	[−0.78]	[−16.83]
Year Fixed effect	Yes	Yes
Industry Fixed effect	Yes	Yes
Observations	16,467	16,467
R-squared	0.162	0.255

The number inside the brackets indicates the T-statistics. ***p < 0.01, **p < 0.05, *p < 0.1.

Table 11. Alternative measure of ESG and its component.

	(1)	(2)	(3)	(4)	(5)	(6)	(7)	(8)
Variables	DV PAT	DV YD	DV PAT	DV YD	DV PAT	DV YD	DV PAT	DV YD
Cash	0.0140	0.00918	−0.00334	0.00246	0.0254	0.0318	0.0200	0.0184
	[0.66]	[0.53]	[-0.21]	[0.17]	[1.01]	[1.81]	[0.97]	[1.57]
ESG	0.216***	0.127***
	[17.45]	[6.85]
SP			0.177***	0.0490
			[8.39]	[1.52]
GP					0.163***	0.101***
					[9.10]	[9.72]
EP							0.208***	0.152***
							[17.83]	[7.34]
ESG* Cash	−0.0724*	−0.0537*
	[−2.20]	[−1.92]
SP* Cash			−0.0375	−0.0476
			[−1.21]	[−1.71]
GP* Cash					−0.0694**	−0.0742**
					[−2.26]	[−2.81]
EP* Cash							−0.102**	−0.0888**
							[−2.87]	[−3.10]
Size	0.0332**	0.170***	0.0391**	0.180***	0.0469***	0.178***	0.0309**	0.165***
	[2.60]	[12.39]	[2.87]	[11.94]	[3.92]	[13.68]	[2.48]	[12.87]
PROF	0.00499***	0.0120***	0.00507***	0.0121***	0.00530***	0.0122***	0.00519***	0.0121***
	[6.80]	[13.85]	[6.91]	[14.03]	[7.38]	[13.58]	[7.23]	[13.67]
lev	−0.533***	−0.438***	−0.543***	−0.445***	−0.541***	−0.443***	−0.538***	−0.440***
	[−11.30]	[−8.96]	[−10.68]	[−8.83]	[−10.68]	[−8.73]	[−10.98]	[−8.80]
NumberAnalysts	0.00748	−0.196***	0.0125	−0.188***	0.0140	−0.192***	0.0120	−0.196***
	[0.33]	[−5.83]	[0.51]	[−5.65]	[0.64]	[−5.67]	[0.53]	[−5.73]
Liq	−0.0451***	−0.0311***	−0.0445***	−0.0314***	−0.0444***	−0.0306***	−0.0443***	−0.0304***
	[−4.15]	[−4.28]	[−4.24]	[−4.44]	[−4.18]	[−4.18]	[−4.06]	[−4.23]
CapitalEx	−2.008***	−1.446***	−2.054***	−1.463***	−1.964***	−1.421***	−2.120***	−1.521***
	[−11.17]	[−4.38]	[−11.80]	[−4.44]	[−10.57]	[−4.32]	[−11.98]	[−4.66]
BoardSize	0.0259***	0.0188***	0.0251***	0.0188***	0.0287***	0.0205***	0.0253***	0.0182***
	[6.25]	[6.06]	[6.18]	[5.88]	[7.22]	[7.06]	[6.20]	[5.83]
CEOduality	0.00924	−0.00106	0.00296	−0.00305	0.0217	0.00574	0.00303	−0.00546
	[0.60]	[−0.09]	[0.19]	[−0.25]	[1.32]	[0.50]	[0.20]	[−0.49]
Constant	−0.601*	−5.104***	−0.705*	−5.299***	−0.956**	−5.310***	−0.532	−4.986***
	[−1.85]	[−18.07]	[−2.04]	[−16.88]	[−3.10]	[−19.90]	[−1.70]	[−18.78]
Observations	16,467	16,467	16,467	16,467	16,467	16,467	16,467	16,467
R-squared	0.160	0.252	0.157	0.250	0.156	0.251	0.159	0.253

The number inside the brackets indicates the T-statistics. ***p < 0.01, **p < 0.05, *p < 0.1.

Data availability statement

Data is available upon request.