The Influence of Ownership Structure on the Firm Dividend Policy Based on Lintner Model

This study investigates the relationship between types of ownership structure and dividend payments of Malaysian listed companies. A cross-sectional analysis of 150 sample firms listed on the main board of Bursa Malaysia for the years 2007 is utilized. The study examines the explanatory power of th...

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Main Author:	Nohasniza, Mohd Hasan Abdullah
Format:	Thesis
Language:	eng eng
Published:	2009
Subjects:	HG Finance
Online Access:	https://etd.uum.edu.my/1765/1/Nohasniza_Binti_Mohd_Hasan_Abdullah.pdf https://etd.uum.edu.my/1765/2/1.Nohasniza_Binti_Mohd_Hasan_Abdullah.pdf
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id	my-uum-etd.1765
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
topic	HG Finance
spellingShingle	HG Finance Nohasniza, Mohd Hasan Abdullah The Influence of Ownership Structure on the Firm Dividend Policy Based on Lintner Model
description	This study investigates the relationship between types of ownership structure and dividend payments of Malaysian listed companies. A cross-sectional analysis of 150 sample firms listed on the main board of Bursa Malaysia for the years 2007 is utilized. The study examines the explanatory power of three alternative models of dividend policy, the full adjustment model, the partial adjustment model and the Waud model modified which are moderated by the possible effects of five types of ownership structure, namely ownership concentration, ownership dispersion, institutional ownership, managerial ownership and foreign ownership. Ownership concentration is measured by two proxies, the Herfindahl Index and a newly form index measured by the summation of the percentage of shares controlled by two major shareholders.Ownership dispersion is measured by ratio of the number of shareholders to total outstanding shares, institutional ownership is measured by a percentage of equity owned by institutional investors, while, managerial ownership is measured by adding the total percentage of shares directly held by non-independent executive directors in the company, and foreign ownership is measured by the sum of all shares in the hands of foreign shareholders in the list of thirty largest shareholders, either held through nominee companies or other corporate foreign share holdings. Both ownership concentration variables are found to be positively and statistically significant in influencing dividends in every type of dividend model. The finding is consistent with agency theory since high dividend payments can be used for mitigating agency conflict as dividends can be substituted for shareholder monitoring. Hence, large shareholders have strong incentives to require higher dividend payments in order to reduce monitoring costs. Nevertheless, this study shows that dividend decisions of Malaysian companies are not influenced by the structure of ownership.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Nohasniza, Mohd Hasan Abdullah
author_facet	Nohasniza, Mohd Hasan Abdullah
author_sort	Nohasniza, Mohd Hasan Abdullah
title	The Influence of Ownership Structure on the Firm Dividend Policy Based on Lintner Model
title_short	The Influence of Ownership Structure on the Firm Dividend Policy Based on Lintner Model
title_full	The Influence of Ownership Structure on the Firm Dividend Policy Based on Lintner Model
title_fullStr	The Influence of Ownership Structure on the Firm Dividend Policy Based on Lintner Model
title_full_unstemmed	The Influence of Ownership Structure on the Firm Dividend Policy Based on Lintner Model
title_sort	influence of ownership structure on the firm dividend policy based on lintner model
granting_institution	Universiti Utara Malaysia
granting_department	College of Business (COB)
publishDate	2009
url	https://etd.uum.edu.my/1765/1/Nohasniza_Binti_Mohd_Hasan_Abdullah.pdf https://etd.uum.edu.my/1765/2/1.Nohasniza_Binti_Mohd_Hasan_Abdullah.pdf
_version_	1747827201394343936
spelling	my-uum-etd.17652013-07-24T12:13:04Z The Influence of Ownership Structure on the Firm Dividend Policy Based on Lintner Model 2009 Nohasniza, Mohd Hasan Abdullah College of Business (COB) College of Business HG Finance This study investigates the relationship between types of ownership structure and dividend payments of Malaysian listed companies. A cross-sectional analysis of 150 sample firms listed on the main board of Bursa Malaysia for the years 2007 is utilized. The study examines the explanatory power of three alternative models of dividend policy, the full adjustment model, the partial adjustment model and the Waud model modified which are moderated by the possible effects of five types of ownership structure, namely ownership concentration, ownership dispersion, institutional ownership, managerial ownership and foreign ownership. Ownership concentration is measured by two proxies, the Herfindahl Index and a newly form index measured by the summation of the percentage of shares controlled by two major shareholders.Ownership dispersion is measured by ratio of the number of shareholders to total outstanding shares, institutional ownership is measured by a percentage of equity owned by institutional investors, while, managerial ownership is measured by adding the total percentage of shares directly held by non-independent executive directors in the company, and foreign ownership is measured by the sum of all shares in the hands of foreign shareholders in the list of thirty largest shareholders, either held through nominee companies or other corporate foreign share holdings. Both ownership concentration variables are found to be positively and statistically significant in influencing dividends in every type of dividend model. The finding is consistent with agency theory since high dividend payments can be used for mitigating agency conflict as dividends can be substituted for shareholder monitoring. Hence, large shareholders have strong incentives to require higher dividend payments in order to reduce monitoring costs. Nevertheless, this study shows that dividend decisions of Malaysian companies are not influenced by the structure of ownership. 2009 Thesis https://etd.uum.edu.my/1765/ https://etd.uum.edu.my/1765/1/Nohasniza_Binti_Mohd_Hasan_Abdullah.pdf application/pdf eng validuser https://etd.uum.edu.my/1765/2/1.Nohasniza_Binti_Mohd_Hasan_Abdullah.pdf application/pdf eng public masters masters Universiti Utara Malaysia Abdelsalam, O., El-Masry, A., & Elsegini, S. 2008. Board composition, ownership structure and dividend policies in an emerging market. Managerial Finance 12: 953-964. Agrawal, A., Jayaraman, N. 1994. The dividend policies of all-equity firms: A direct test of the free cash flow theory. 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The Influence of Ownership Structure on the Firm Dividend Policy Based on Lintner Model

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