This study investigates the effect of board diversity in terms of gender and ethnicity on dividend payout policy when a firm has free cash flow agency problem. It also tests whether the probability of diverse boards would minimize free cash flow agency problem through making large dividend...

Board diversity is important especially in countries which practice a one-tier board system, such as Malaysia. Under the system, board appointments are usually controlled by the firm's substantial shareholders, and as a result, directors are chosen based on “the old-boy” network or “people...