Cash holding, institutional ownership and dividend payout: evidence from East Africa

Purpose This study seeks to examine the moderating effect of institutional ownership on the relationship between cash holding and dividend payout among listed firms in the East Africa Community. Design/methodology/approach The study used a sample of 33 East African Community listed firms over the period of 2011–2022 collected from published audited financial statements. To test the hypothesized relationships, this study used ordinary least squares (OLS). To validate the results, the study employed additional estimation models which comprises of logistic regression, fixed effect and system generalized methods of moments for robustness. Findings The empirical findings indicated that cash holding is significantly and positively associated with dividend payout, while institutional ownership had a negative and significant effect on dividend payout. In addition, the findings revealed that institutional ownership moderated the relationship between cash holding and dividend payout. Research limitations/implications Future researchers may investigate the relationship dividend payout and other forms of ownership and exploring firms that are not listed as well as those in other jurisdictions. Practical implications The findings of this study may have implication to managers, policymakers, investors and academia. For instance, policy makers and regulators may improve dividend payout for East African Community listed firms by considering the effect of cash holding and institutional ownership. Originality/value This study extends the literature by examining whether institutional ownership moderates the relationship between cash holding and dividend payout from a developing region perspective; a gap that is missing in existing literature.