Corporate social responsibility and dividend payments in the Malaysian capital market: the interacting effect of family-controlled companies

This study investigates the influence of corporate social responsibility (CSR) on dividend payments using a sample of 263 Malaysian companies that participated in the Capital Market Development Fund–Bursa Research Scheme over the period 2008–2013. The study applies the pooled ordinary least squares, quantile, Tobit, Heckman’s self-selection model and propensity score matching regression techniques. The results from these techniques show that CSR is significantly and positively associated with dividend payments, meaning that the higher the CSR, the greater the amount of dividends paid to shareholders. However, when the interacting effect of family control is considered on the association between CSR and dividend payments, family control has a significantly negative influence on the relationship, indicating that family companies engage in less CSR, thereby negatively affecting dividend payments. Overall, the findings support the view that serving the interest of stakeholders paves the ways for satisfying shareholders’ claims, and reveals the reality of family companies’ behaviour to shareholders and stakeholders. Thus, this study adds to the literature on the dividend conundrum and the role CSR plays in shareholders’ prosperity’ it is the first attempt to establish the direct effect of CSR on dividend payments in the Malaysian capital market and study the interacting effect of family control.