Business strategy, cash holdings, and dividend payouts

Business strategy's impact on firm cash holdings and dividend payouts has largely remained unexplored. We identify a fundamental direct link between firm's business strategy its payouts. Analysing two large samples of data US firms over the period 1992–2017, we find strong evidence that prospectors (defenders) are likely to hold more (less) pay less (more) dividends than other firms. Further analysis suggests frequently do defenders. The results robust battery robustness checks additional analysis. Overall, suggest identifying significantly helps understand payout decisions.