Moderated Moderation Effects of Debt and Firm Size on Cash Holdings and Dividend Payouts

PurposeThis paper aims to discover the underlying mechanisms by which corporate financial policies, cash holdings, capital structure and dividend payouts, transmit their effects on firm value in the “Middle East and North Africa” (MENA) emerging markets.Design/methodology/approachThe authors employ a novel integration of path modelling with parallel multiple mediation analysis to empirically test the hypothesised indirect effects through the mechanisms represented by the value of financial flexibility (VOFF) and agency costs.FindingsThe authors do not find any evidence of the association between cash holdings, dividend payouts, and firm value when the mechanisms through the VOFF and agency costs are considered. While these two forces, i.e. the VOFF and agency costs, have balanced mediation effects on the relationship between cash holdings and firm value, they represent equivalent and complementary mechanisms by which dividend payouts transmit their positive impact on firm value. Moreover, we document a significant negative partial mediation effect of agency costs on the relationship between leverage and firm value; however, we do not find any evidence supporting the mediation effect of the VOFF on such a relationship.Originality/valueThis paper sheds new light on the forces that govern the nature of the relationships between corporate financial policies and firm value.

This study aims to determine and analyze the effect of financial performance (profitability, leverage, capital expenditure, liquid asset substitute), IOS, and company size on cash holding by using dividend policy as a moderating variable. The number of samples of this study was 108 observations of non-financial companies in the LQ 45 Index for the period of 2011-2016. The results of moderated regression analysis (MRA) shows that profitability has a positive effect on cash holding, while leverage, liquid asset substitute, IOS, and firm size have negative effect on cash holdings. The results of this study also show that dividend policy can be a moderating variable which weakens the positive effect of profitability on cash holding and strengthens the negative effect of capital expenditure, but the dividend policy is not able to moderate the influence of leverage on cash holding. As a result, the companies were able to make large dividend payouts to reduce the excessive amount of cash holding that managers often abused for their own benefits and increasingly prospering investors with a given dividend.

This study examines the impact of financial leverage and firm size on cash holdings in Indonesia and explores how these effects differ before and during the COVID-19 crisis. The research utilizes unbalanced panel data, comprising 209 firm-year observations from 2018 to 2020. The findings reveal that financial leverage and firm size exhibit a U-shaped relationship with cash holdings. Specifically, in companies with low finan-cial leverage and small firm size, both financial leverage and firm size negatively affect cash holdings. Conversely, in companies with high financial leverage and large firm size, these factors positively influence cash holdings. The study also finds that financial leverage, regardless of whether it is low or high, has a consistent effect on cash hold-ings across the pre- and during-COVID-19 periods. However, the impact of firm size on cash holdings differs between small and large companies when comparing the pre-COVID-19 and during-COVID-19 periods. This research contributes to the literature on cash holdings by analyzing the U-shaped effects of financial leverage and firm size in manufacturing companies in Indonesia, employing a static random effects model.

Small firms often follow the financial behavior of large firms to sustain operations and mitigate risks during periods of uncertainty. This study examines the relationship between corporate cash holdings of small and large firms, while assessing the impact of corporate governance and financial constraints among 200 non-financial companies listed on the Pakistan Stock Exchange (PSX) from 2013 to 2018. Financial constraints (FC) are measured using the Altman Z-score, and corporate governance (CG) is evaluated through Board Size, Board Independence, Board Meetings, Institutional Shareholding, and Executive Shareholding. The control variables include Non-Cash Assets, Operating Cash Flow, Capital Expenditure, Net Working Capital, Sales Growth, Leverage, and Firm Size, while Cash Holdings serve as the dependent variable. Using a deductive and quantitative approach with panel data analysis (Fixed Effect Model) in EViews 9, the study finds that small and large firms exhibit a positive and significant correlation in cash-holding behavior. Financial constraints show a significant positive relationship with cash holdings, indicating that constrained firms retain more liquidity as a precautionary measure. Among corporate governance proxies, only Executive Shareholding significantly influences cash holdings, while others are insignificant. Furthermore, all control variables, except Capital Expenditure, significantly affect firms’ cash-holding levels. These findings contribute to understanding the cash management behavior of firms in emerging markets, emphasizing the combined role of governance mechanisms and financial constraints in shaping corporate liquidity decisions.

The context of this study focuses on the benefits of debt usability, firm size, and dividend policy in increasing the value of cash-mediated companies in LQ45 companies for the period 2017-2020. This study aims to find out and analyze the effect of debt, firm size, and dividend policy on the firm's value, either directly or indirectly, through the mediation of cash holdings. The samples in this study are LQ45-indexed companies from 2017-2020. The samples in this study fall into the purposive sampling category, where respondents are selected based on the criteria specified in this study. The sample numbered 24 companies that can be processed. The analysis method used is descriptive analysis and regression of panel data using the Eviews 10 software application. The results showed that increasing the firm's size will decrease the firm's value while increasing the dividend policy will increase the firm's value. Debt and cash holdings are unable to affect the value of the firm. In addition, only variable debt can negatively affect cash holdings, while the size of the firm and its dividend policy cannot affect cash holdings. This research implies that companies indexed LQ45 need to pay attention to optimal cash holding adequacy because it can be influenced by company debt so that the company can maintain its position in the LQ45 index.

The financial determinants of corporate cash holdings: Evidence from some emerging markets

The study is aimed at exploring the relationship between dividend payout and capital structure, and to explore the determinants of dividend policy and capital structure of manufacturing sector of Pakistan. Penal data ranging from 2006 to 2011 of selected 100 manufacturing firms of Pakistan is used in this study. Dividend policy and capital structure have their own determinants. Firm’s size, profitability, liquidity, growth opportunities, tangibility and capital structure are used as determinants of dividend policy, while determinants of capital structure which are used in this study are firm’s size, profitability, liquidity, growth opportunities, tangibility, tax saving other than debt and income variability and dividend payout. Two stages least square is used for estimation. Size, profitability, liquidity and leverage are found to have a positive significant impact on dividend policy whereas growth opportunities is found to have a negative significant impact on dividend policy and tangibility has no impact. On the other hand growth opportunities, tangibility and income variability are found to have positive significant relationship with leverage (capital structure), whereas firm’s Size, profitability, liquidity and tax saving other than debt are found to have negative significant relationship with leverage. This study concludes that dividend policy and capital structure are positively correlated with each other.

This study aims to determine the effect of capital structure, firm size and dividend policy on firm value. Several previous studies on firm value showed different results. Therefore, other research needs to be done to retest the theory of firm value. The population of this study was 15 manufacturing companies. The sampling method used was purposive sampling method, so that 15 sample companies were obtained for 3 years of observation (2018 - 2020) with 45 observations (observations). The research data were obtained from sample companies which were downloaded from the Indonesia Stock Exchange website. The data analysis technique used is descriptive statistical analysis and multiple regression analysis. The process of data analysis carried out first is descriptive statistics, classical assumption test, multiple regression analysis and then hypothesis testing. The results of this study partially show that capital structure, firm size and dividend policy have a significant effect on firm value. The results of this study indicate that capital structure, firm size and dividend policy have a simultaneous effect on firm value. Keywords - Capital Structure, Firm Size, Dividend Policy and Firm Value

ABSTRACT.This present study aimed to examine the effect of capital structure, cash holding, and firm size on firm value with corporate governance as the moderator, empirical study on mining companies in 2015-2019. The population in this study were mining companies. The period used was 2015-2019. The sample obtained by purposive sampling method was of 45 data, and was done by using the eViews 8.0 statistical test. The statistical test results revealed that capital structure did not have significant effect on firm value, cash holding had a significant effect on firm value, firm size did not have significant effect on firm value, capital structure moderated by corporate governance did not have significant effect on firm value and cash holding moderated by Corporate governance had a significant effect on firm value.

Ownership concentration, firm performance, and dividend policy in Hong Kong

This study aims to determine the effect of Liquidity, Profitability, Capital Structure, Asset growth, and Firm size on the Firm value of Food and Beverage Sub-Sector Companies listed on the Indonesia Stock Exchange (IDX). The sampling method used is purposive sampling. The sample selected was 12 food and beverage sub-sector companies listed on the Indonesia Stock Exchange (IDX) from 2011-2020. The data used in the financial statements of each sample company was published through www.IDX.co.id and www.financeyahoo.com. The analytical method used in this study is a quantitative method, with classical assumption testing and statistical analysis, namely multiple linear regression analysis using a random-effects model with the help of Eviews10. The results of this study indicate that Liquidity and Capital structure have a positive and insignificant effect on firm value partially. Profitability, Asset growth, and Firm size have a positive and significant impact on firm value partially. Dividend policy cannot moderate the influence of the relationship between Liquidity, Profitability, Capital Structure, Asset growth, and Firm size on Firm Value. Keywords: liquidity, profitability, capital structure, firm growth, firm size, dividend policy, firm value.

The study investigates the under‐researched relationship between capital structure and dividend policy in emerging markets with regard to the Jordanian market. The empirical analysis focuses on the estimation of both single equation models and structure equation models using the reduced form equations to examine the joint determinants of capital structure and dividend policy. The study investigates whether capital structure and dividend policy theories can explain the financial decisions in emerging market such as the Jordanian market. Namely, the study examines agency theory, signalling theory, pecking order theory and bankruptcy theory. The results indicate that there is a positive relationship between debt‐to‐asset ratio on the one hand, and asset tangibility, profitability, market‐to‐book, liquidity, firm size, and industry classification on the other hand. Also, there is a negative relationship between debt‐to‐asset ratio and profitability. In addition, there is a positive relationship between dividend payout ratio on the one hand, and profitability, asset tangibility, market‐to‐book and industry classification on the other hand. Finally, the results of the reduced form equations show that capital structure and dividend policy have the following common factors: profitability; asset tangibility; market‐to‐book; industry classification; and limited evidence of institutional ownership. Therefore, the determinants of capital structure and dividend policy in emerging markets such as the Jordanian market share the same set of suggested factors with the developed markets.

This research aim to analyze the determinants of cash holdings and the excess value on manufacturing companies listed in Indonesia Stock Exchange 2011-2015 period.Model research analysis using Structural Equation Modeling (SEM). The independent variables are firm size, leverage, cash flow, net working capital and growth equity. And the dependent variable is the excess cash holdings and value. This study uses panel data from 320 observational data of companies that have been listed in the Indonesia Stock Exchange in the period 2011-2015. The results showed that 1) cash flow, net working capital have significant effect on cash holdings. 2) leverage, firm size, growth equity doesn’t have significant effect on cash holdings. 3) cash holdings have significant effect on the excess value. 4) cash flow, net working capital, leverage doesn’t have significant effect on the excess value. 5) firm size, growth equity doesn’t have significant effect on the excess value.This research aim to analyze the determinants of cash holdings and the excess value on manufacturing companies listed in Indonesia Stock Exchange 2011-2015 period.Model research analysis using Structural Equation Modeling (SEM). The independent variables are firm size, leverage, cash flow, net working capital and growth equity. And the dependent variable is the excess cash holdings and value. This study uses panel data from 320 observational data of companies that have been listed in the Indonesia Stock Exchange in the period 2011-2015. The results showed that 1) cash flow, net working capital have significant effect on cash holdings. 2) leverage, firm size, growth equity doesn’t have significant effect on cash holdings. 3) cash holdings have significant effect on the excess value. 4) cash flow, net working capital, leverage doesn’t have significant effect on the excess value. 5) firm size, growth equity doesn’t have significant effect on the excess value.This research aim to analyze the determinants of cash holdings and the excess value on manufacturing companies listed in Indonesia Stock Exchange 2011-2015 period.Model research analysis using Structural Equation Modeling (SEM). The independent variables are firm size, leverage, cash flow, net working capital and growth equity. And the dependent variable is the excess cash holdings and value. This study uses panel data from 320 observational data of companies that have been listed in the Indonesia Stock Exchange in the period 2011-2015. The results showed that 1) cash flow, net working capital have significant effect on cash holdings. 2) leverage, firm size, growth equity doesn’t have significant effect on cash holdings. 3) cash holdings have significant effect on the excess value. 4) cash flow, net working capital, leverage doesn’t have significant effect on the excess value. 5) firm size, growth equity doesn’t have significant effect on the excess value.This research aim to analyze the determinants of cash holdings and the excess value on manufacturing companies listed in Indonesia Stock Exchange 2011-2015 period.Model research analysis using Structural Equation Modeling (SEM). The independent variables are firm size, leverage, cash flow, net working capital and growth equity. And the dependent variable is the excess cash holdings and value. This study uses panel data from 320 observational data of companies that have been listed in the Indonesia Stock Exchange in the period 2011-2015. The results showed that 1) cash flow, net working capital have significant effect on cash holdings. 2) leverage, firm size, growth equity doesn’t have significant effect on cash holdings. 3) cash holdings have significant effect on the excess value. 4) cash flow, net working capital, leverage doesn’t have significant effect on the excess value. 5) firm size, growth equity doesn’t have significant effect on the excess value.This research aim to analyze the determinants of cash holdings and the excess value on manufacturing companies listed in Indonesia Stock Exchange 2011-2015 period.Model research analysis using Structural Equation Modeling (SEM). The independent variables are firm size, leverage, cash flow, net working capital and growth equity. And the dependent variable is the excess cash holdings and value. This study uses panel data from 320 observational data of companies that have been listed in the Indonesia Stock Exchange in the period 2011-2015. The results showed that 1) cash flow, net working capital have significant effect on cash holdings. 2) leverage, firm size, growth equity doesn’t have significant effect on cash holdings. 3) cash holdings have significant effect on the excess value. 4) cash flow, net working capital, leverage doesn’t have significant effect on the excess value. 5) firm size, growth equity doesn’t have significant effect on the excess value.

The present study focuses on how various firm characteristics influence their dividend payout policies. The study finds empirical evidence with regard to primarily two aspects of corporate dividend decisions—dividend increase and decrease, whose exploration is inadequate in the past literature. The random effect logistic regression has been considered in order to analyze the panel dataset from 2001–2002 to 2021–2022 including 3739 listed Indian firms. The empirical models are formatted based on the relevant dividend-related theories in the Indian context such as the residual theory, transaction cost theory, signalling theory, etc. Further, additional tests are conducted regarding the robustness of the reported results. The empirical results document that firm size, profitability, promoter holdings, cash holdings, and life cycle have a favourable influence on the propensity of both increasing and decreasing dividend payouts. In contrast, earnings volatility, leverage, and free cash flow reduce firms’ tendency to increase and decrease dividend payments. These results indicate that higher liquidity and ownership concentration provide firms with greater financial flexibility to adjust their dividend policies as per their prevailing opportunities. The findings of the study offer insightful information about how to arrange dividend policies with firm-specific traits which will be helpful for managers and investors to make better decisions.

Objective: Research focuses on the direct effect of firm size on the market value at the expense of covariates such as dividend policy. Therefore, this study investigated the mediation effect of dividend policy on the relationship between firm size and market value. Methodology: Panel research design was employed with a target of 54 companies listed at the Nairobi security exchange in Kenya, operational in the relatively stable economy period between 2008 and 2017. Data were sourced from published audited financial reports. Analysis was done using both descriptive and inferential statistics. The study tested for full mediation, partial mediating, or lack of mediation. Data analysis was facilitated using STATA (version 15) software. Findings: The results showed that firm size had a negative and significant effect on market value (b1=-0.378 p<0.001) and that dividend policy had no significant effect on market value, b2=-0.035, p>0.05. The researcher concluded that there was no ground for mediation. Originality: The results confirm that dividend policy does not mediate between firm size and market value, albeit in the Kenyan Nairobi Securities Exchange (NSE) context, and provides reasons to explore other proxies of dividend policy. In finding that dividend policy does not mediate in the relationship between firm size and market value, this study becomes the first one to justify working from home during the COVID-19 pandemic since the issue of dividends does not arise working at home. Practical Implications: The negative effect of firm size on market value is an interesting finding that implies that with the emergence of technology, firm size is inversely proportional to market value. Consequently, small firms can exploit technology more effectively than large firms to boost their market value.