 Does business strategy affect dividend payout policies?Akinloye Akindayomi and Md Ruhul Amin Journal of Business Research, 2022, vol. 151, issue C, 531-550 Abstract: This study examines the relation between a firm's business strategy and its dividend payout policies. Using a comprehensive measure of business strategy based on Miles and Snow's (1978, 2003) theoretical framework, we find that a firm's business strategy affects its dividend payout policies. Specifically, we document that firms following an innovation-oriented business strategy (PROSPECTORS) are less likely to pay, initiate, and increase dividends than those following a cost-effective business strategy (DEFENDERS). We also identify operating cash flow volatility and financial covenant constraints as two potential mechanisms through which innovation-oriented business strategy influences dividend payout policies. The business strategy effect is more pronounced in growth firms, the post-financial crisis period, and firms with lower CEO pay-for-performance sensitivity. Our results are robust to various tests, including the IV-Probit model, dynamic panel model, and entropy balanced approach. Keywords: Business strategy; Dividend initiation; Cash flow volatility; Financial covenant (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:151:y:2022:i:c:p:531-550 DOI: 10.1016/j.jbusres.2022.07.028 Access Statistics for this article Journal of Business Research is currently edited by A. G. Woodside More articles in Journal of Business Research from Elsevier |
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