Dividend payout: Unveiling the power of ESG investments

Bao Cong Nguyen To; Nam Duc Phung; Hoang Dinh Tran

doi:10.46223/HCMCOUJS.econ.en.15.5.3690.2025

Abstract

This paper aims to explore the link between Environmental, Social, and Governance (ESG) factors and dividend policy across various regions and economic contexts. Using an international sample from developed and emerging markets for the period 2015 - 2021, we utilize a panel data estimation methodology with multi-way fixed effects, including time, industry, and country. We also employ both Difference-in-Differences (DID) and Propensity Score Matching (PSM) methodologies. Our study finds a positive link between ESG and dividend payout ratios for firms in both developed and emerging markets, indicating the global influence of ESG. This suggests that firms investing more in ESG activities tend to pay higher dividends to shareholders. Even during the Covid-19 pandemic, our research confirms that the positive association between ESG and dividend payout ratios persists, although it is somewhat weaker than before, highlighting the continued relevance of ESG during times of crisis. Robustness checks provide strong support for these findings.

JEL codes

G3; G35; M14.

Keywords

Covid-19; dividend payout; ESG; emerging markets; sustainable finance

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References

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DOI: https://doi.org/10.46223/HCMCOUJS.econ.en.15.5.3690.2025

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