The Relationship between Promoters’ Holdings, Institutional Holdings, Dividend Payout Ratio and Firm Value: The Firm Age and Size as Moderators

Balamuralikrishnan Chakkravarthy, Francis Gnanasekar Irudayasamy, Arul Ramanatha Pillai, Rajesh Elangovan, Natarajan Rengaraju and Satyanarayana Parayitam ()
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Balamuralikrishnan Chakkravarthy: PG and Research Department of Commerce, St. Joseph’s College (Autonomous), Bharathidasan University, Tiruchirappalli 620024, Tamil Nadu, India
Francis Gnanasekar Irudayasamy: PG and Research Department of Commerce, St. Joseph’s College (Autonomous), Bharathidasan University, Tiruchirappalli 620024, Tamil Nadu, India
Arul Ramanatha Pillai: PG and Research Department of Commerce, St. Joseph’s College (Autonomous), Bharathidasan University, Tiruchirappalli 620024, Tamil Nadu, India
Rajesh Elangovan: PG and Research Department of Commerce, Bishop Heber College (Autonomous), Bharathidasan University, Tiruchirappalli 620024, Tamil Nadu, India
Natarajan Rengaraju: PG and Research Department of Commerce, National College (Autonomous), Bharathidasan University, Tiruchirappalli 620024, Tamil Nadu, India
Satyanarayana Parayitam: Department of Management and Marketing, University of Massachusetts Dartmouth, 285 Old Westport Road, North Dartmouth, Dartmouth, MA 02747, USA

JRFM, 2023, vol. 16, issue 11, 1-15

Abstract: The present paper aims to empirically examine the effect of promoters’ holdings and institutional holdings on dividend payout ratio and the firm value. Most importantly, this paper explores the age and size of the firm as the moderators in the relationships. Data collected from 23 companies from India and 253 data points were analyzed to test the hypothesized relationships. The results indicate that promoters’ holdings and institutional holdings are positively associated with dividend payout ratio and firm value. Further, moderator hypotheses suggest that (i) firm age moderates the relationship between promoters’ holdings and dividend payout ratio, (ii) firm size moderates the relationship between institutional holdings and dividend payout ratio, (iii) firm age moderates the relationship between promoters’ holdings and firm value, and (iv) firm size moderates the relationship between institutional holdings and firm value. The implications for theory and practice are discussed. The conceptual model developed and tested in this research contributes to both the literature on dividend payout ratio and firm value and to the needs of institutional investors interested in increasing the firm value.

Keywords: institutional holdings; promoters’ holdings; firm value; dividend payout ratio; firm size (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2023
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