The asset-light strategies and the dividend puzzle: International evidence from the hospitality industry |
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| Affiliation: | 1. National Kaohsiung University of Hospitality and Tourism, Taiwan;2. Auckland University of Technology, New Zealand;1. School of Hospitality and Tourism Management, Purdue University, Marriott Hall, 900 W. State Street, West Lafayette, IN 47907, United States;2. College of Hotel and Tourism Management, Kyung Hee University, Dongdaemun-gu, Seoul, 130-701, South Korea;1. School of Hospitality Administration, Boston University, 928 Commonwealth Avenue, Brookline, Room 325, Boston, MA 02446, USA;2. School of Hospitality and Tourism Management, Purdue University, 900 W State Street, Marriott Hall, Room 245, West Lafayette, IN 47907-2115, USA;1. Lancaster University Management School, United Kingdom;2. Isenberg School of Management, University of Massachusetts-Amherst, 121 Presidents Dr, Amherst, MA 01003 |
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| Abstract: | This study investigates the impact of the asset-light strategy on dividend policy using a sample of large international publicly-listed companies (399 firm-year observations) operating in the hotel and restaurant industry over the 2006–2018 period. Taking the perspective of agency theory, we posit that the asset-light strategy in conjunction with significant growth is a context in which high agency conflicts arise. Using Tobit and OLS models, our results indicate that adopting an asset-light strategy only impacts dividend policy for firms with high growth. More interestingly, the positive impact of the asset-light strategy on dividend payouts occurs for firms with substantial growth if institutional ownership is low. In such situations, significant potential agency conflicts (due to high free cash flows) coupled with the lack of monitoring from institutional investors lead firms to use dividends as a monitoring tool. Finally, a change analysis supports our main findings. |
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| Keywords: | Asset-light Dividend payout Growth Institutional ownership Hotel Restaurant |
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