We examine how organizational form affects corporate payouts. Conglomerates pay out more than pure plays in both cash dividends and total payouts (cash dividends plus share repurchases). Furthermore, their payouts are more sensitive to cash flows compared to pure-play firms. The sensitivity of payouts to cash flow increases as the cross-segment correlation in a conglomerate decreases. Corporate payouts increase after mergers and acquisitions (M&As), especially among M&As in which acquirers and targets are less correlated. These results suggest that the coinsurance among different divisions of a conglomerate allows them to pay out more cash flow to their shareholders than pure-play firms.

We find that corporate innovation is positively related to board diversity as measured by a multidimensional index. The benefit of board diversity is more pronounced for firms with more complex operations, more experienced boards, and stronger external governance, suggesting that diverse boards have superior advising capacity. We find evidence to suggest that firms with diverse boards engage in more exploratory innovations and develop new technology in unfamiliar areas. As a result, they create a larger number of both most-cited and uncited patents. Finally, of the six different aspects of board diversity, professional diversity matters the most for corporate innovation.