IDEAS home Printed from https://ideas.repec.org/a/gam/jijfss/v9y2021i3p49-d632588.html
   My bibliography  Save this article

The Influence of Government Shareholding on Dividend Policy in Malaysia

Author

Listed:
  • Philip Sinnadurai

    (Independent Researcher, Marsfield, Sydney, NSW 2122, Australia)

  • Ravichandran Subramaniam

    (School of Business, Monash University Malaysia, Jalan Lagoon Selatan, Bandar Sunway, Subang Jaya 47500, Selangor Darul Ehsan, Malaysia)

  • Susela Devi

    (Sunway University Business School, Sunway University, No. 5 Jalan Universiti, Bandar Sunway 47500, Selangor Darul Ehsan, Malaysia)

Abstract

We investigate the association between dividend policy and government shareholding, using Malaysian data. We hypothesize a positive association. We contribute to the literature about dividend policy. Unique features of our study include adaptations to the Malaysian institutional setting, with respect to usage of dividend relevance theory, research methodology, and data collection. The methodology entails two-stage least squares regressions. Dividend payout and dividend yield are the dependent variables in tests of the research hypothesis. The independent variable of interest measures ownership by government-related institutional investors. The sample comprises 1190 company-years, over the investigation period 2006–2013. The results support our hypothesis. The evidence suggests that this support principally emanates from companies with low-quality corporate governance.

Suggested Citation

  • Philip Sinnadurai & Ravichandran Subramaniam & Susela Devi, 2021. "The Influence of Government Shareholding on Dividend Policy in Malaysia," IJFS, MDPI, vol. 9(3), pages 1-29, September.
    • Handle: RePEc:gam:jijfss:v:9:y:2021:i:3:p:49-:d:632588
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7072/9/3/49/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7072/9/3/49/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    2. Mitton, Todd, 2004. "Corporate governance and dividend policy in emerging markets," Emerging Markets Review, Elsevier, vol. 5(4), pages 409-426, December.
    3. Glenn Rioux, 2012. "Governance by Boards and Audit Committees," Palgrave Macmillan Books, in: Sabri Boubaker & Duc Khuong Nguyen (ed.), Board Directors and Corporate Social Responsibility, chapter 3, pages 39-59, Palgrave Macmillan.
    4. Jorge Farinha, 2003. "Corporate governance: a review of the literature," CEF.UP Working Papers 0306, Universidade do Porto, Faculdade de Economia do Porto.
    5. Francis, Jennifer & LaFond, Ryan & Olsson, Per & Schipper, Katherine, 2005. "The market pricing of accruals quality," Journal of Accounting and Economics, Elsevier, vol. 39(2), pages 295-327, June.
    6. Ru Gao & Xin Yu, 2020. "How to measure capital investment efficiency: a literature synthesis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(1), pages 299-334, March.
    7. Phan, Dinh Hoang Bach & Tee, Chwee Ming & Tran, Vuong Thao, 2020. "Do different types of political connections affect corporate investments? Evidence from Malaysia," Emerging Markets Review, Elsevier, vol. 42(C).
    8. Floyd, Eric & Li, Nan & Skinner, Douglas J., 2015. "Payout policy through the financial crisis: The growth of repurchases and the resilience of dividends," Journal of Financial Economics, Elsevier, vol. 118(2), pages 299-316.
    9. DeAngelo, Harry & DeAngelo, Linda & Skinner, Douglas J., 2004. "Are dividends disappearing? Dividend concentration and the consolidation of earnings," Journal of Financial Economics, Elsevier, vol. 72(3), pages 425-456, June.
    10. Claessens, Stijn & Yurtoglu, B. Burcin, 2013. "Corporate governance in emerging markets: A survey," Emerging Markets Review, Elsevier, vol. 15(C), pages 1-33.
    11. Tim Adam & Vidhan K. Goyal, 2008. "The Investment Opportunity Set And Its Proxy Variables," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 31(1), pages 41-63, March.
    12. repec:elg:eebook:14347 is not listed on IDEAS
    13. Driver, Ciaran & Grosman, Anna & Scaramozzino, Pasquale, 2020. "Dividend policy and investor pressure," Economic Modelling, Elsevier, vol. 89(C), pages 559-576.
    14. Hu, Aidong & Kumar, Praveen, 2004. "Managerial Entrenchment and Payout Policy," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 39(4), pages 759-790, December.
    15. García Lara, Juan Manuel & García Osma, Beatriz & Penalva, Fernando, 2016. "Accounting conservatism and firm investment efficiency," Journal of Accounting and Economics, Elsevier, vol. 61(1), pages 221-238.
    16. Fung, Simon Y.K. & Gul, Ferdinand A. & Radhakrishnan, Suresh, 2015. "Corporate political connections and the 2008 Malaysian election," Accounting, Organizations and Society, Elsevier, vol. 43(C), pages 67-86.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Philip Sinnadurai, 2022. "“Empirical Corporate Finance: Opportunities and Challenges”—Editorial Synthesis of the Special Issue," JRFM, MDPI, vol. 15(9), pages 1-8, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Paul Tanyi & David B. Smith & Xiaoyan Cheng, 2021. "Does firm payout policy affect shareholders’ dissatisfaction with directors?," Review of Quantitative Finance and Accounting, Springer, vol. 57(1), pages 279-320, July.
    2. Lepetit, L. & Meslier, C. & Strobel, F. & Wardhana, L., 2018. "Bank dividends, agency costs and shareholder and creditor rights," International Review of Financial Analysis, Elsevier, vol. 56(C), pages 93-111.
    3. Chintrakarn, Pandej & Jiraporn, Pornsit & Treepongkaruna, Sirimon & Mook Lee, Sang, 2022. "The effect of board independence on dividend payouts: A quasi-natural experiment," The North American Journal of Economics and Finance, Elsevier, vol. 63(C).
    4. Seyed Alireza Athari, 2021. "The effects of institutional settings and risks on bank dividend policy in an emerging market: Evidence from Tobit model," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 4493-4515, July.
    5. Jabbouri, Imad, 2016. "Determinants of corporate dividend policy in emerging markets: Evidence from MENA stock markets," Research in International Business and Finance, Elsevier, vol. 37(C), pages 283-298.
    6. Kathleen M. Kahle & René M. Stulz, 2017. "Is the US Public Corporation in Trouble?," Journal of Economic Perspectives, American Economic Association, vol. 31(3), pages 67-88, Summer.
    7. Qin, Wei & Liang, Quanxi & Jiao, Yan & Lu, Meiting & Shan, Yaowen, 2022. "Social trust and dividend payouts: Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 72(C).
    8. González, Maximiliano & Guzmán, Alexander & Pombo, Carlos & Trujillo, María Andréa, 2012. "Family involvement and dividend policy in listed and non-listed firms," Galeras. Working Papers Series 034, Universidad de Los Andes. Facultad de Administración. School of Management.
    9. Grey, Colette & Flynn, Antoinette & Donnelly, Ray, 2020. "Management compensation contracts and distribution policies in the US technology sector," International Review of Financial Analysis, Elsevier, vol. 67(C).
    10. Adra, Samer & Gao, Yang & Huang, Jin & Yuan, Jiayi, 2023. "Geopolitical risk and corporate payout policy," International Review of Financial Analysis, Elsevier, vol. 87(C).
    11. Fodil Adjaoud & Walid Ben-Amar, 2010. "Corporate Governance and Dividend Policy: Shareholders' Protection or Expropriation?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 37(5-6), pages 648-667.
    12. Baker, H. Kent & Dam, Lammertjan & De Ridder, Adri, 2021. "Payouts and stock ownership," Journal of Multinational Financial Management, Elsevier, vol. 60(C).
    13. Anwer, Zaheer & Mohamad, Shamsher & Paltrinieri, Andrea & Hassan, M. Kabir, 2021. "Dividend payout policy of Shariah compliant firms: Evidence from United States," Pacific-Basin Finance Journal, Elsevier, vol. 69(C).
    14. Geiler, P.H.M. & Renneboog, L.D.R., 2014. "Executive Remuneration and the Payout Decision," Other publications TiSEM d9ae7344-0a29-4aa0-a016-8, Tilburg University, School of Economics and Management.
    15. He, Wen & Ng, Lilian & Zaiats, Nataliya & Zhang, Bohui, 2017. "Dividend policy and earnings management across countries," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 267-286.
    16. Geetanjali Pinto & Shailesh Rastogi, 2019. "Sectoral Analysis of Factors Influencing Dividend Policy: Case of an Emerging Financial Market," JRFM, MDPI, vol. 12(3), pages 1-18, June.
    17. Booth, Laurence & Zhou, Jun, 2017. "Dividend policy: A selective review of results from around the world," Global Finance Journal, Elsevier, vol. 34(C), pages 1-15.
    18. Kambar Farooq & Muhammad Azeem & Chin Man Chui & Jun (Tony) Ruan, 2023. "Board Connections and Dividend Policy," Abacus, Accounting Foundation, University of Sydney, vol. 59(4), pages 983-1040, December.
    19. Tee, Chwee Ming & Pak, Mei Sen & Lee, Mei Yee & Majid, Abdul, 2021. "CEO generational differences, risk taking and political connections: Evidence from Malaysian firms," Journal of Behavioral and Experimental Finance, Elsevier, vol. 31(C).
    20. Fodil Adjaoud & Walid Ben‐Amar, 2010. "Corporate Governance and Dividend Policy: Shareholders’ Protection or Expropriation?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 37(5‐6), pages 648-667, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:9:y:2021:i:3:p:49-:d:632588. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.