Review Reports - Characteristics of the Chairman of the Board of Directors and Their Impact on Dividend Payments in the Moroccan Stock Exchange

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

The goal of this study is to analyze the impact of chairman characteristics on the dividend policy of Moroccan firms listed on the Casablanca Stock Exchange. While the article addresses a relevant topic, it requires revisions prior to publication. Below are detailed suggestions for improvement:

The introduction section would benefit from a complete restructuring to improve clarity. Specifically, the authors should:

Emphasize the importance and significance of the topic.
Briefly mention one or two gaps in the existing literature, as detailed further in the literature review section, to justify the need for this study.
Clearly articulate the main research questions or hypotheses that guide the study.
Provide a concise summary of the methodologies and their relevance to the research objectives.
Explain the novel aspects of the study and how it advances the understanding the impact of chairman characteristics on the dividend policy.
Include a brief reminder of the article’s structure.

Author Response

Response to reviewer n°1:

Emphasized the importance of the topic

The revised introduction highlights the role of chairman characteristics in shaping dividend policy, particularly in the Moroccan market, where corporate governance practices differ significantly from developed economies.

Identified research gaps

We have explicitly discussed the limited research on the relationship between chairman characteristics and dividend policy, particularly in emerging markets, demonstrating the novelty of this study.

Clarified research questions

The introduction now includes three clearly articulated research questions to define the study's focus and scope.

Summarized the methodology

A concise overview of the research design has been added, including the sample, the use of a static panel data model, control variables, and proxies for dividend policy.

Explained the novel contributions of the study

We have emphasized the integration of behavioral finance perspectives with corporate governance analysis and the focus on Moroccan firms as unique contributions to the literature.

Provided an article roadmap

A brief outline of the article's structure has been included to guide readers through the content.

Reviewer 2 Report

Comments and Suggestions for Authors

It can be noted that this article proposal fits into the standard format of an article proposal, starting with an abstract, defining keywords, and an introduction in which an incursion into the current state of knowledge in the researched field is made.

The Harvard-style citation method for the studied bibliographic references, current references and those of interest for the research field addressed, is noteworthy.

The authors also first present, from a theoretical point of view, the variables they intend to use in the quantitative application part of the article proposal.

The quantitative econometric model developed by the authors of this article proposal can also be noted, which, with the help of a database and a time horizon, empirically validates this research undertaken.

The conclusions drawn from the empirical testing of the econometric model should also be noted.

Considering the above, I recommend validating this research and recommend publishing this article proposal in this form.

Author Response

We have explicitly discussed the limited research on the relationship between chairman characteristics and dividend policy, particularly in emerging markets, demonstrating the novelty of this study.

Reviewer 3 Report

Comments and Suggestions for Authors

TITLE: Chairman of the board of directors’ characteristics and their impact on dividend payments in the Moroccan stock exchange

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This study explores the relationship between chairman characteristics and dividend policy. My specific comments (some major, some minor) are the following.

1- Abstract is too long, and some unnecessary details should not be kept.

2- I still do not understand what kind of relationship between the chairman characteristics and dividend policy. The authors should put more emphasize on this subject in the introduction part.

3- There is a need to reveal the uniqueness of the research question that aims to explain the role of chairman characteristics to keep the research landscape as agile and robust, and the WHY question. Also, the aim of the study and the research gap(s) are not that clear.

4- Several new papers have raised concerns about interpreting the relationship between chairman characteristics and dividend policy. Authors must provide an overview of very recent contributions to explain their hypotheses.

5- It's not worth going into details about the type of topics related to Moroccan stock exchange. I still do not understand what the logic or any objective perspective is as to your decision behind this sample choice.

6- Please insert the descriptive statistics of independent variables, correlation matrix and Hausman test result and its p-value.

7- Authors must make sure that it meets all of the assumptions associated with that type of regression (Static Panel model in this case). Some diagnostic tests to check if the model is appropriate or not. Testing Pooling vs. Panel Data are required. Try to explain more how well a model fits your data.

8- The empirical results are not discussed within the theoretical perspectives and authors may need to give further analysis of different effects.

9- Implications and limitations must be presented in the conclusion section after a short summary of the study results. How exactly can investors or firms exploit your findings in the dividend policy.

10- Please discuss avenues for future research based on your study limitations.

Good luck with your paper.

Comments on the Quality of English Language

The paper's writing including English language needs to be improved. I find not just grammatical mistakes, but serious errors in content, too.

Author Response

- The English could be improved to more clearly express the research.

We have reviewed the article thoroughly to ensure clarity and correctness of the English language used.

1- Abstract is too long, and some unnecessary details should not be kept.

We believe that the abstract includes the necessary information to convey the main objective of the study, the methodology employed, and the key results. If there are any details you find unnecessary, we kindly request you to specify them.

2- I still do not understand what kind of relationship between the chairman characteristics and dividend policy. The authors should put more emphasize on this subject in the introduction part.

We appreciate the reviewer’s insightful comment regarding the rationale for focusing on chairman characteristics rather than CEO traits. To address this, we have revised the relevant sections of the manuscript, specifically the literature review and the discussion of the chairman's role in corporate decisions.

The revised text highlights the distinct governance responsibilities of the chairman, which are pivotal in shaping strategic decisions, including dividend policy. Unlike the CEO, who focuses on operational execution, the chairman’s primary role involves leading the board of directors, setting agendas, facilitating discussions, and ensuring alignment between board decisions and shareholder interests. This distinction underscores the chairman’s unique position in influencing high-level financial strategies, including dividend distributions.

To further support this argument:

We incorporate Farinha (2003), who emphasizes the governance risks associated with CEO-chair duality, which can lead to entrenchment and reduced board independence. This supports the importance of analyzing the chairman’s role separately, particularly in governance structures where dual roles exist.
Hermalin and Weisbach (1998) are cited to highlight the chairman’s critical role in strengthening board independence and aligning corporate decisions with shareholder value.
Additionally, we discuss the overlap in CEO and chairman roles in 62% of Moroccan firms, which further necessitates an understanding of how chairman-specific characteristics influence dividend policies, particularly in a governance context where decision-making power is often centralized.

By integrating these studies and arguments, we strengthen the justification for focusing on chairmen and provide a robust theoretical and empirical foundation for this choice.

We have revised the introduction to ensure these elements are explicitly addressed. Specifically:

The revised introduction highlights the study’s focus on the underexplored influence of chairman characteristics on dividend policy, addressing a significant gap in the existing literature.
We have clarified the aim of the study, which is to provide empirical evidence on the impact of chairman traits—such as age, tenure, gender, nationality, and founder status—on dividend policy in Moroccan firms, a context that remains largely unexamined.
The "why" aspect has been emphasized by discussing the unique structural and governance features of the Moroccan stock market, such as its concentrated ownership and decision-making dynamics, which make chairman characteristics particularly impactful.

We appreciate your suggestion to incorporate recent literature focusing on the relationship between chairman characteristics and dividend policy. Upon thorough review, we found that direct studies on this specific topic are limited. If you are aware of any new articles addressing this specific area, we kindly request you to share them with us.

As Moroccan researchers, our decision to focus on the Moroccan stock exchange stems from both its unique governance and structural characteristics and our deep familiarity with the local context. The Casablanca Stock Exchange, characterized by concentrated ownership structures, the prevalence of family-owned and state-controlled enterprises, and centralized decision-making dynamics, provides a compelling setting to study the influence of chairman characteristics on dividend policy. These features amplify the chairman’s impact on financial decisions, offering insights that may not be as evident in markets with more dispersed governance systems. Moreover, there is a notable lack of studies examining dividend policy in the Moroccan context, particularly with a focus on leadership characteristics. By addressing this gap, we aim to contribute to the literature on emerging markets and behavioral finance while leveraging our expertise to explore these dynamics in depth.

6- Please insert the descriptive statistics of independent variables, correlation matrix and Hausman test result and its p-value.

Thank you for your suggestion regarding the inclusion of descriptive statistics, the correlation matrix, and the Hausman test results. While we understand the value of providing detailed statistical information, we believe that including these elements in the main body of the article would not add significant value to the discussion or interpretation of the results. Instead, it would unnecessarily lengthen the article without directly contributing to the main objectives of the study. For readers interested in these details, we are happy to provide them as supplementary materials upon request. This approach ensures that the article remains concise and focused while still offering transparency for those who seek additional statistical insights.

To analyze panel data, the Hausman test was conducted to determine the most appropriate model for our dataset. The test results indicated that the fixed effects model was the most suitable approach, and it was subsequently employed for our regressions.

8- The empirical results are not discussed within the theoretical perspectives and authors may need to give further analysis of different effects.

Thank you for your observation regarding the discussion of empirical results within theoretical perspectives. Upon review, we believe that the article adequately connects the findings to established theories such as agency theory, signaling theory, and behavioral finance. Specifically:

The positive correlation between chairman age and dividend policy is discussed in the context of behavioral finance theories, particularly in terms of risk aversion and decision-making tendencies associated with demographic traits.

The negative relationship between tenure and dividend payouts is linked to agency theory, explaining how entrenched behavior and overconfidence bias influence financial decisions.

These connections are explicitly addressed in the discussion section, ensuring that our results are analyzed within a robust theoretical framework.

We appreciate your suggestion regarding the presentation of implications and limitations. In the article, we have explicitly discussed the limitations and their relevance in Section 6. Additionally, the implications for investors and firms are addressed in the discussion section, emphasizing how the findings regarding chairman characteristics can inform decision-making on corporate governance and financial policies. However, we acknowledge the importance of reinforcing these points in the conclusion. To that end, we will ensure the conclusion includes a concise summary of the study results, their implications for investors and firms, and their relevance to dividend policy decisions.

10- Please discuss avenues for future research based on your study limitations.

We have carefully considered the need to discuss avenues for future research. In the revised article, we have expanded Section 6 to include specific recommendations for future research, such as employing advanced econometric techniques to address endogeneity issues, exploring comparative analyses in other emerging markets, and integrating cultural dimensions to better understand the relationship between chairman characteristics and dividend policy. These additions aim to provide a clearer roadmap for future studies while addressing the study's limitations.

Round 2

Reviewer 3 Report

Comments and Suggestions for Authors

To improve its depth and clarity, a few things could be improved:

1- The abstract does not meet the standards required. It’s not necessary to mention the Hausman test and endogeneity issue within the abstract part. Another example: this phrase «A comprehensive literature review on behavioral finance contextualizes the empirical findings». Is it a specific area of your manuscript? Unnecessary sentences distract the reader from what you are trying to contribute.

2- Authors should present systematic review updates. Authors must provide an overview of very recent contributions in the five last years. For example, in the section 2. The concept of behavioral finance. As we see here, the most recent reference is for 2017. High number of more recent papers have investigated the psychological characteristics of the chairman of the board.

3- In your case, I think that the descriptive statistics are necessary to assess the features of the specific data set. Also, the correlation matrix is required to visualize some potential interactions between some explanatory variables simultaneously. Excessive overlap among collinear variables can complicate the interpretation of the results.

Good luck with your paper.

Author Response

1- The abstract has been revised to comply with the journal's guidelines. The updated abstract is presented in a single-paragraph structured format and clearly outlines the study's background, methods, results, and conclusions. Additionally, references to the Hausman test and endogeneity issues have been removed from the abstract.

2- Recent studies have been incorporated into section 2 to emphasize the importance of chairman and director characteristics in analyzing financial decisions, as suggested. These additions highlight recent contributions to the literature.

3- The descriptive statistics, correlation matrix, and Hausman test results have been added to the manuscript. It should be noted that, while the correlation matrix has been integrated into the article.