Adjudicating the nexus of environmental, social and governance performance with dividend payout: the moderating role of firm's size

PurposeThis study aims to investigate the effect of environmental, social and governance performance on dividend payout and whether this association is influenced by the size of the firm.Design/methodology/approachOur sample involves 1,040 firm-year observations of Indian-listed firms from 2017 to 2021. This study uses a panel data fixed effects model, a two-step system generalized method of moments and a two-stage least squares regression approach. We also use a different proxy for dividend payout in our models to ensure the robustness of our findings.FindingsOur results reveal a positive association of environmental, social and governance performance with dividend payout. The individual components, i.e. environmental performance, social performance and governance performance, also highlight similar positive relationships, stating that sustainable firms prefer more dividend payments. After introducing the moderating factor as the firm's size, the findings indicate that large-size sustainable firms prefer lower dividend payouts.Practical implicationsOur results have vital implications for potential investors, policymakers, managers and other stakeholders, given that the firm's size impacts the sustainability and dividend payout practices.Originality/valueTo the author's knowledge, this is the first study to capture the moderating role of a firm's size on the nexus of environmental, social and governance performance and dividend payout in the Indian context.