Effect of Dividend Policy, Profitability, and Capital Structure on the Value of Non-Family and Family Firms in the USA

Abstract

The research uses a quantitative approach to evaluate the influence of dividend policy, profitability, and capital structure on the value of family and non-family firms in the USA. Panel data regression analysis covered the periods from 2020 to 2023. The data was collected from 30 firms; 15 family firms and 15 non-family firms. The results suggest that dividend payout enhances firms' value similarly for family and non-family firms, despite the difference being statistically insignificant. Profitability also supports firm value, with a significant influence in family firms. In contrast, leverage impacts the firm's value negatively. Even though the difference between family and non-family firms is not statistically significant, it has a more pronounced impact on family firms due to their stronger focus on financial stability. Generally, family firms' funding sources are more stable due to their long-term orientation and conservative financial strategies that enhance their financial stability. This study extends the application of stewardship and pecking order theories to understanding financial management in family and non-family firms, and provides new insights into family firms' financial behavior, particularly regarding dividend policy and capital structure. Additionally, it offers practical guidance for investors and financial managers on optimizing these elements to improve firm value. Policymakers based on the results to develop strategies that facilitate access to capital for innovation and enable the firms to remain competitive in an uncertain market.

Received: 22 October 2024 / Accepted: 28 February 2025 / Published: 02 March 2025