Do non-financial factors influence corporate dividend policies? Evidence from business strategy

Business strategy, cash holdings, and dividend payouts

“…Unlike our consistent results, the results in table 4 of Cao et al (2022) contradict the results in their tables 2 and 3, which suggest that dividend payouts are increasing in firm performance (ROA). In contrast, table 4 in Cao et al (2022) suggests that strategy has a negative effect in high-performing firms based on ROA and no effect in low-performing firms. Given that defenders exhibit higher ROA than prospectors (see Bentley et al, 2013, Bentley-Goode et al, 2019Chen et al, 2017) and prospectors are less likely to pay dividends than defenders, the results in table 4 of Cao et al (2022) In terms of the economic significance of our results in Table 5, a one standard deviation increase in the strategy score of a PROSPECTOR is associated with a 4.03% decline in the DIVEARN ratio and an 8.67% decline in the DIVTA ratio, and a 7.87% decline in the DIVMVE ratio.…”

“…In contrast, table 4 in Cao et al (2022) suggests that strategy has a negative effect in high-performing firms based on ROA and no effect in low-performing firms. Given that defenders exhibit higher ROA than prospectors (see Bentley et al, 2013, Bentley-Goode et al, 2019Chen et al, 2017) and prospectors are less likely to pay dividends than defenders, the results in table 4 of Cao et al (2022) In terms of the economic significance of our results in Table 5, a one standard deviation increase in the strategy score of a PROSPECTOR is associated with a 4.03% decline in the DIVEARN ratio and an 8.67% decline in the DIVTA ratio, and a 7.87% decline in the DIVMVE ratio. In contrast, the corresponding values for DEFENDER are a 12.27% increase in DIVEARN, a 6.50% increase in DIVTA, and an 8.57% increase in DIVMVE.…”

“…Two studies that are closely related to this paper are Magerakis and Tzelepis (2020; hereafter, MT) and Cao et al (2022;hereafter, CCHL). Our study differs from MT and CCHL along several dimensions.…”

Importance of Liquidity Indicators in Intervening the Dividend Policy

“…If the company chooses to distribute profits as dividends, the growth rate will decrease so that it has a negative impact on the company's shares. On the other hand, if the company does not distribute dividends, the market will give a negative signal to the company's prospects so that an increase in dividends signals a favorable change in manager expectations and a decrease in dividends shows a pessimistic view of the company's prospects in the future (Cao et al, 2022).…”

“…Consideration for investors is the rate of return on the funds they invest in the form of shares in the form of dividends or in the form of capital gains (L. Liu & Shu, 2022). The authority to control dividend policy is one of the powers delegated by shareholders to the board of directors (Akindayomi & Amin, 2022;Lee, 2022) Companies that decide to distribute their profits in the form of dividends will make available company funds limited, but on the other hand the distribution of dividends can give a positive signal for companies in the capital market because the company is considered capable of providing returns to shareholders in the form of dividends (Cao et al, 2022;Kasahara & Orihara, 2022). Shareholders or investors certainly want the company's profit and profit per share to be stable or even increase every year (Barros et al, 2021(Barros et al, , 2022Grassetti et al, 2022).…”