Moderated Moderation Effects of Debt and Firm Size on Cash Holdings and Dividend Payouts
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Abstract
This study contributes new insights into dividend policy by investigating how debt levels and firm size moderate the relationship between cash holdings and dividend payouts. Grounded in the MM theory of capital structure, the research challenges the traditional assumption of dividend irrelevance by incorporating real-world financial constraints and governance dynamics. The sample consists of 475 non-financial firms listed in Thailand, covering data from 2019 to 2023. Using Hayes’s PROCESS Macro for moderated moderation analysis, the findings reveal that cash holdings positively influence dividend payouts, and this effect is contingent upon both the firm’s leverage and size. Specifically, small firms with low debt levels tend to offer higher dividend payout, whereas large firms with below-average industry debt show diminished dividend payouts. This interaction presents a novel theoretical contribution by linking liquidity management, capital structure, and firm scale in explaining dividend behavior dimensions that have rarely been integrated in prior research. The study extends the existing literature on investment returns and corporate financial policy and provides practical implications for investors and corporate decision-makers operating in emerging markets.
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