Is ESG more comprehensive than governance? What dividends reveal
Year: 2026
Type: article
Abstract: We examine the relationship between ESG performance and dividend payout policy across European and U.S. firms. Our findings reveal a positive relationship, primarily driven by the environmental and social dimensions of ESG, while governance plays a minor role. Notably, the environmental and social pillars remain significant even after accounting for traditional corporate governance variables. This highlights that ESG captures distinct aspects of management decision-making that governance alone does not. ESG shows no significant effect on dividends in the energy sector, where firms in the U.S. maintain higher payouts, while European companies reinvest more due to regulatory pressure. Overall, ESG proves to be an independent and relevant driver of dividend policy. • ESG performance is generally positively associated with dividend payout. • Environmental and social dimensions drive this effect. • ESG impact persists after controlling for governance. • In the energy sector, ESG lacks explanatory power. • ESG is a context-dependent determinant of payout policy.
Source: Finance research letters
Authors: Nina Anolick, Helena Posselt, Niklas Wagner
Institutions: University of Passau, Corvinus University of Budapest
Language: English
Subfield: Strategy and Management
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,730
OpenAlex ID: W7124162198