Cao, Zhangfan, Chen, Steven Xianglong 
ORCID: 0000-0003-0142-2654, Harakeh, Mostafa and Lee, Edward
(2022)
Do non-financial factors influence corporate dividend policies? Evidence from business strategy.
INTERNATIONAL REVIEW OF FINANCIAL ANALYSIS, 82.
p. 102211.
|
Text
BSDP_IFRA_Accepted Manuscript.pdf - Author Accepted Manuscript Download (481kB) | Preview |
Abstract
In this paper, we examine the influence of business strategy on dividend policy. We find that firms following an innovation-oriented strategy (prospectors) pay significantly lower dividends than those following an efficiency-oriented strategy (defenders). Our cross-sectional analyses show that such association is more pronounced among firms with greater investment opportunities and superior performance. Further analysis reveals that prospectors make significantly more capital investment, consistent with prospectors paying fewer dividends to finance their investment activities. Moreover, we address potential endogeneity concerns by implementing (i) a triple-difference analysis (DiDiD) that exploits an exogenous shock that hinders innovation through curbing the supply of highly skilled employees and (ii) an instrumental variable approach. Our results are robust to a propensity-score-matched (PSM) analysis, the inclusion of individual business strategy components, and the use of alternative measures of the dependent variables. Overall, our findings highlight business strategy as an inherent and non-financial determinant of dividend policies.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | Business strategy, Dividend payout, Capital investment, Talent mobility |
| Divisions: | Faculty of Humanities and Social Sciences > School of Management |
| Depositing User: | Symplectic Admin |
| Date Deposited: | 26 Jul 2022 13:23 |
| Last Modified: | 16 Nov 2023 02:30 |
| DOI: | 10.1016/j.irfa.2022.102211 |
| Related URLs: | |
| URI: | https://livrepository.liverpool.ac.uk/id/eprint/3159392 |
Dimensions
Dimensions
