Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/326178 
Year of Publication: 
2024
Citation: 
[Journal:] Cogent Business & Management [ISSN:] 2331-1975 [Volume:] 11 [Issue:] 1 [Article No.:] 2332496 [Year:] 2024 [Pages:] 1-25
Publisher: 
Taylor & Francis, Abingdon
Abstract: 
This research aims to explore the nexus between business strategy and dividend payments. Utilizing a dataset encompassing U.S.-listed firms spanning the period from 1995 to 2018, our analysis reveals that firms employing prospector strategies exhibit a higher propensity for dividend payments compared to defender firms. Our findings persist even when accounting for firm fixed effects, employing an alternative subsample methodology, and demonstrating resilience to endogeneity and Propensity Score Matching (PSM) analysis. We also document that agency conflict issues related to free cash flow in prospector firms, stemming from overinvestment and capital expenditure reduction, contribute to an escalation in dividend payouts relative to defender firms. Finally, the prospector-dividend payment association is more pronounced in the context of weaker firm-level information and governance environments and during periods characterized by high policy uncertainty. Overall, our study fills a crucial gap in the literature on the complexities of dividend decisions within the context of different strategic orientations.
Subjects: 
business strategy
dividend payments
overinvestment
capital expenditure
information and governance environments
policy uncertainty
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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