Houqe MNMonem RMvan Zijl T2024-06-122024-06-122023-12Houqe MN, Monem RM, van Zijl T. (2023). Business strategy, cash holdings, and dividend payouts. Accounting and Finance. 63. 4. (pp. 3999-4035).0810-5391https://mro.massey.ac.nz/handle/10179/69797Business strategy's impact on firm cash holdings and dividend payouts has largely remained unexplored. We identify a fundamental and direct link between a firm's business strategy and its cash holdings and dividend payouts. Analysing two large samples of data on US firms over the period 1992–2017, we find strong evidence that prospectors (defenders) are likely to hold more (less) cash and pay less (more) dividends than other firms. Further analysis suggests that prospectors pay dividends less frequently than do defenders. The results are robust to a battery of robustness checks and additional analysis. Overall, the results suggest that identifying a firm's business strategy significantly helps to understand a firm's cash holdings and dividend payout decisions.business strategycash holdingsdefendersdividend payoutprospectorsJournal article10.1111/acfi.130821467-629Xjournal-article3999-4035