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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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