The relationship between corporate governance and dividend payout ratio: Evidence from Malaysia

The main objective of this study is to find the relationships between corporate governance mechanisms and dividend payout ratio among the Malaysian public listed companies. A sample of 164 Malaysian companies for the year 2013 was selected from the Bursa Malaysia website. This study examines the rel...

Full description

Saved in:

Bibliographic Details
Main Author:	Musa, Shehu
Format:	Thesis
Language:	eng eng
Published:	2014
Subjects:	HD2709-2930.7 Corporations
Online Access:	https://etd.uum.edu.my/4608/1/s815031.pdf https://etd.uum.edu.my/4608/2/s815031_abstract.pdf
Tags:	Add Tag No Tags, Be the first to tag this record!

id	my-uum-etd.4608
record_format	uketd_dc
institution	Universiti Utara Malaysia
collection	UUM ETD
language	eng eng
advisor	Kamardin, Hasnah
topic	HD2709-2930.7 Corporations
spellingShingle	HD2709-2930.7 Corporations Musa, Shehu The relationship between corporate governance and dividend payout ratio: Evidence from Malaysia
description	The main objective of this study is to find the relationships between corporate governance mechanisms and dividend payout ratio among the Malaysian public listed companies. A sample of 164 Malaysian companies for the year 2013 was selected from the Bursa Malaysia website. This study examines the relationships between board compositions, board size, CEO Duality, proportion of family members on the board, direct ownership, institutional ownership, concentrated ownership as the corporate governance variables and dividend payout ratio among the Malaysian public listed companies. The control variables include leverage, firm size, and profitability while the dividend payout ratio as the dependent variable. The findings of this study show that only institutional ownership and concentrated ownership are found to be positive and significant in influencing the dividend payout ratio. But, the independent director is also found to be significant in influencing the dividend payout ratio in negative direction. The finding of this study will enhance the literature in the field for future studies and will also be worthwhile for the companies, investors as well as the policy makers and regulators in Malaysia by providing information on the effectiveness of some corporate governance mechanisms that influence the firm dividend payout ratio after the implementation of revised Code on Corporate Governance 2012 to make important recommendations for the improvement in the corporate governance practices in Malaysia and to safeguard the interest of minority shareholders.
format	Thesis
qualification_name	masters
qualification_level	Master's degree
author	Musa, Shehu
author_facet	Musa, Shehu
author_sort	Musa, Shehu
title	The relationship between corporate governance and dividend payout ratio: Evidence from Malaysia
title_short	The relationship between corporate governance and dividend payout ratio: Evidence from Malaysia
title_full	The relationship between corporate governance and dividend payout ratio: Evidence from Malaysia
title_fullStr	The relationship between corporate governance and dividend payout ratio: Evidence from Malaysia
title_full_unstemmed	The relationship between corporate governance and dividend payout ratio: Evidence from Malaysia
title_sort	relationship between corporate governance and dividend payout ratio: evidence from malaysia
granting_institution	Universiti Utara Malaysia
granting_department	Othman Yeop Abdullah Graduate School of Business
publishDate	2014
url	https://etd.uum.edu.my/4608/1/s815031.pdf https://etd.uum.edu.my/4608/2/s815031_abstract.pdf
_version_	1747827764612825088
spelling	my-uum-etd.46082022-08-03T02:00:34Z The relationship between corporate governance and dividend payout ratio: Evidence from Malaysia 2014 Musa, Shehu Kamardin, Hasnah Othman Yeop Abdullah Graduate School of Business Othman Yeop Abdullah Graduate School of Business HD2709-2930.7 Corporations The main objective of this study is to find the relationships between corporate governance mechanisms and dividend payout ratio among the Malaysian public listed companies. A sample of 164 Malaysian companies for the year 2013 was selected from the Bursa Malaysia website. This study examines the relationships between board compositions, board size, CEO Duality, proportion of family members on the board, direct ownership, institutional ownership, concentrated ownership as the corporate governance variables and dividend payout ratio among the Malaysian public listed companies. The control variables include leverage, firm size, and profitability while the dividend payout ratio as the dependent variable. The findings of this study show that only institutional ownership and concentrated ownership are found to be positive and significant in influencing the dividend payout ratio. But, the independent director is also found to be significant in influencing the dividend payout ratio in negative direction. The finding of this study will enhance the literature in the field for future studies and will also be worthwhile for the companies, investors as well as the policy makers and regulators in Malaysia by providing information on the effectiveness of some corporate governance mechanisms that influence the firm dividend payout ratio after the implementation of revised Code on Corporate Governance 2012 to make important recommendations for the improvement in the corporate governance practices in Malaysia and to safeguard the interest of minority shareholders. 2014 Thesis https://etd.uum.edu.my/4608/ https://etd.uum.edu.my/4608/1/s815031.pdf text eng public https://etd.uum.edu.my/4608/2/s815031_abstract.pdf text eng public masters masters Universiti Utara Malaysia Abukar H-Sufi, F. (2012). Board characteristics and firm performance of public listed companies in Malaysia. Unpublished Master Dissertation, Universiti Utara Malaysia. Abidin, Z. Z., Kamal, N. M., & Jusoff, K. (2014). Board structure and corporate performance in Malaysia. International Journal of Economics and Finance, 1, p150. Abdullah, W. R., Ismail, N. & Saique, R. M. (2005). Determinants of corporate dividend ratio: a Malaysian perspective. Institute of research, development & commercialisation (irdc) Universiti Teknologi Mara. Abdullah, N.M. (2009). The influence of ownership structure on the firms dividend ratio based Lintner model. Unpublished Master Dissertation, Universiti Utara Malaysia. Abdullah, H., Ahmad, Z., & Roslan, S. (2012). The influence of ownership structure on the firms dividend ratio based Lintner model. International Review of Business Research Papers, 8, 71-88. Abdelsalam, O., El-Masry, A., & Elsegini, S. (2008). Board composition, ownership structure and dividend policies in an emerging market: Further evidence from CASE 50. Managerial Finance, 34, 953-964. Abor, J., & Fiador, V. (2013). Does corporate governance explain dividend ratio in Sub-Saharan Africa? International Journal of Law and Management, 55, 201-225. Adjaoud, F., & Ben‐Amar, W. (2010). Corporate governance and dividend ratio: shareholders‟ protection or expropriation? Journal of Business Finance & Accounting, 37, 648-667. Afzal, M., & Sehrish, S. (2010). Ownership Structure, Board Composition and Dividend Ratio in Pakistan. COMSATS Institute of Information Technology, Islamabad-Pakistan, 24. Ajanthan, A. (2013). Corporate governance and dividend ratio: A study of listed hotels and restaurant companies in Sri Lanka. International Journal of Managment, IT and Engineering, 3, 98-114. Agyei, S. K., & Marfo-Yiadom, E. (2011). Dividend Ratio and Bank Performance in Ghana. International Journal of Economics & Finance, 3. Al-Matari, Y. A., Al-Swidi, A. K., Fadzil, F. H. B. F. H., & Al-Matari, E. M. (2012). Board of Directors, Audit Committee Characteristics and the Performance of Saudi Arabia Listed Companies. International Review of Management and Marketing, 2, 241-251. Al-Gharaibeh, M., Zurigat, Z., & Al-Harahsheh, K. (2013). The Effect of Ownership Structure on Dividends Ratio in Jordanian Companies. Interdisciplinary Journal of Contemporary Research in Business, 4, 769-796. Al-Najjar, B. (2010). Corporate governance and institutional ownership: evidence from Jordan. Corporate Governance, 10, 176-190. Al-Nawaiseh, M. (2013). Dividend Ratio and Ownership Structure: An Applied Study on Industrial Companies in Amman Stock Exchange. Journal of Management Research, 5, 83-106. Amran, N. A. (2011). Corporate governance mechanisms and company performance: Evidence from Malaysian companies. International Review of Business Research Papers, 7, 101-114. Arshad, Z., Akram, Y., Scholar, M., Amjad, M., & Usman, M. (2013). Ownership structure and dividend ratio. Interdisciplinary Journal of contemporary research in business. Baker, H. K., Mukherjee, T. K., & Powell, G. E. (2005). Distributing excess cash: the role of specially designated dividends. Financial Services Review, 14. Baskin, J., & Miranti, P. A History of Corporate Finance, 1997: Cambridge University Press, New York. Bebczuk, R. N. (2005). Corporate governance and ownership: Measurement and impact on corporate performance and dividend policies in Argentina: Interamerican Development Bank. Black, F., & Scholes, M. (1974). The effects of dividend yield and dividend ratio on common stock prices and returns. Journal of Financial Economics, 1, 1-22. Bolbol, I. I. (2012). Board characteristics and dividend payout of Malaysian companies. Unpublished Master Dissertation, Universiti Utara Malaysia. Claessens, S., & Fan, J. P. (2002). Corporate governance in Asia: A survey. International Review of finance, 3, 71-103. Clifford, P., & Evans, R. (1997). Non‐Executive Directors: A Question of Independence. Corporate Governance: An International Review, 5, 224-231. Commission, S. (2012). Malaysian code on corporate governance 2012. Kuala Lumpur: Securities Commission. Dimson, E. (1979). Risk measurement when shares are subject to infrequent trading. Journal of Financial Economics, 7, 197-226. Easterbrook, F. H. (1984). Two agency-cost explanations of dividends. American Economic review, 74, 650-659. Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of law and economics, 301-325. Fama, E. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 2, 288-307. Farinha, J. (2003). Dividend ratio, corporate governance and the managerial entrenchment hypothesis: an empirical analysis. Journal of Business Finance and Accounting, 9-10 306-686. Frankfurter, G. M., & Wood Jr, B. G. (2002). Dividend ratio theories and their empirical tests. International Review of Financial Analysis, 11, 111-138. Ghabayen, M. A. (2012). Board characteristics and firm performance: Case of Saudi Arabia. International Journal of Accounting and Financial Reporting, 2, 168-200. Gordon, M. J. (1963). Optimal investment and financing ratio. The Journal of finance, 18, 264-272. Gujarati, D. N. (2003). Basic Econometrics. 4th: New York: McGraw-Hill. Gugler, K. (2003). Corporate governance, dividend payout ratio, and the interrelation between dividends, R&D, and capital investment. Journal of Banking & Finance, 27, 1297-1321. Habibi, S., & Talebnia, G. (2012). The relationship between ownership concentration, financial performance and profit distribution ratio. Journal homepage: http://www.sciroad.com/tss.html. Haniffa, R., & Hudaib, M. (2006). Corporate governance structure and performance of Malaysian listed companies. Journal of Business Finance & Accounting, 33, 1034-1062. Haye, E. (2014). Dividend Ratio and Agency Effects: A Look at Financial Firms. International Journal of Economics and Finance, 6. Harada, K., & Nguyen, P. (2011). Ownership concentration and dividend ratio in Japan. Managerial Finance, 37, 362-379. Ho, S. S., & Shun Wong, K. (2001). A study of the relationship between corporate governance structures and the extent of voluntary disclosure. Journal of International Accounting, Auditing and Taxation, 10, 139-156. Huda, N., & Abdullah, M. N. Relationship between Ownership Structure and Dividend Ratio: Empirical Evidence from Chittagong Stock Exchange. Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American economic review, 323-329. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305-360. Jensen, G. R., Solberg, D. P., & Zorn, T. S. (1992). Simultaneous determination of insider ownership, debt, and dividend policies. Journal of Financial and Quantitative analysis, 27, 247-263. Jensen, M. C. (1993). The modern industrial revolution, exit, and the failure of internal control systems. The Journal of finance, 48,831-880. John, K., & Senbet, L. W. (1998). Corporate governance and board effectiveness. Journal of Banking & Finance, 22,371-403. Kania, S. L., & Bacon, F. W. (2005). What factors motivate the corporate dividend decision. ASBBS E–Journal, 1, 97-107. Khan, T. (2006). Company Dividends and Ownership Structure: Evidence from UK Panel Data. The Economic Journal, 116,172-C189. Koch, P. D., & Shenoy, C. (1999). The information content of dividend and capital structure policies. Financial Management, 16-35. Kowalewski, O., Stetsyuk, I., & Talavera, O. (2007). Corporate governance and dividend ratio in Poland: Discussion papers/German Institute for Economic Research. Kyereboah-Coleman, A., & Amidu, M. (2008). The link between small business governance and performance: the case of the Ghanaian SME sector. Journal of African Business, 9, 121-143. Lintner, J. (1962). Dividends, earnings, leverage, stock prices and the supply of capital to corporations. The Review of Economics and Statistics, 243-269. Marfo-Yiadom, E., & Agyei, S. (2011). Determinants of dividend ratio of banks in Ghana. International Research Journal of Finance and Economics, 61, 99-108. Mansourinia, E., Emamgholipour, M., Rekabdarkolaei, E. A., & Hozoori, M. (2013). The Effect of Board Size, Board Independence and CEO Duality on Dividend Ratio of Companies: Evidence from Tehran Stock Exchange. Miller, M. H., & Modigliani, F. (1961). Dividend ratio, growth, and the valuation of shares. The Journal of Business, 34, 411-433. Miller, M. H., & Scholes, M. S. (1978). Dividends and taxes. Journal of Financial Economics, 6, 333-364. Miller, M. H., & Scholes, M. S. (1982). Dividends and taxes: Some empirical evidence. The Journal of Political Economy, 90, 1118. Nohasniza, M. H. A. (2009). The Influence of ownership structure on the firm dividend ratio based on Lintner Model. Universiti Utara Malaysia. Obradovich, J., & Gill, A. (2013). Coporate Governance, Institutional Ownership, and the Decision to Pay the Amount of Dividends: Evidence from USA. Ramli, N. M. (2010). Ownership Structure and dividend ratio: Evidence from Malaysian companies. International Review of Business Research Papers, 6, 170-180. Ross, S. A. (1973). The economic theory of agency: The principal's problem. The American Economic Review, 134-139. Rozeff, M. (1982). Growth, beta and agency costs as determinants of dividend payout ratios. Journal of Financial Research, 5, 249-259. Saleh, M., Zulkifli, N. & Muhamad, R. (2009) Corporate social responsibility disclosure and its relation on institutional ownership Evidence from public listed companies in Malaysia. Managerial Auditing Journal. Short, H., Zhang, H., & Keasey, K. (2002). The link between dividend ratio and institutional ownership. Journal of Corporate Finance, 8, 105-122. Setia-Atmaja, L. (2010). Dividend and debt policies of family controlled firms: the impact of board independence. International Journal of Managerial Finance, 6, 128-142. Shafai, N. A. B. (2012). Dividend ratio and share price volatility: Malaysia evidence. Shah, S. Z. A., Ullah, W., & Hasnain, B. (2011). Impact of ownership structure on dividend ratio of firm (evidence from Pakistan). International Proceedings of Economics Development & Research, 3. Short, H., Zhang, H., & Keasey, K. (2002). The link between dividend ratio and institutional ownership. Journal of corporate finance, 8, 105-122. Shleifer, A., & Vishny, R. (1997). Large shareholders and corporate control. Journal of Political Economy, 95, 461–488. Subramaniam, R., & Devi, S. (2011). Corporate governance and dividend ratio in Malaysia. Paper presented at the International Conference on Business Economics Research. Taufil-Mohd, K. N., Md-Rus, R., & Musallam, S. R. (2013). The effect of ownership structure on firm performance in Malaysia. International Journal of Finance and Accounting, 2, 75-81. Thanatawee, Y. (2012). Ownership structure and dividend ratio: Evidence from Thailand. International Journal of Economics and Finance, 5. Ullah, H., Fida, A., & Khan, S. (2012). The Impact of Ownership Structure on Dividend Ratio Evidence from Emerging Markets KSE-100 Index Pakistan. International Journal of Business and Social Science, 3, 298-330. Wahab, E. A. A., How, J., & Verhoeven, P. (2008). Corporate governance and institutional investors: Evidence from Malaysia. Asian Academy of Management Journal of Accounting and Finance, 4, 67-90. Yulianto, A. (2014). The Corporate Governance Mechanisms Towards Dividend Ratio in Indonesian Stock Exchange. Yermack, D. (1996). Higher market valuation of companies with a small board of directors. Journal of Financial Economics, 40, 185-211. Younas, Z. I., Sarwar, S., & Siddiqi, M. W. (2012). Dividend is a substitute or an outcome of Auditor Monitoring? Another Evidence. Journal of Global Economy (ISSN Print-0975-3931, Online-2278-1277), 8, 145. Yarram, S. R. (2010). Board Characteristics and Dividend Ratio: Australian Evidence. Economics and Public Ratio, 1-21.

The relationship between corporate governance and dividend payout ratio: Evidence from Malaysia

Similar Items