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Executive Compensation, Ownership Structure and Dividend Payout: Evidence from Malaysia

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  • Ravichandran K. Subramaniam

    (School of Business, Accounting and Finance Department, Monash University Malaysia, Jalan Lagoon Selatan, 47500 Bandar Sunway, Selangor, Malaysia)

  • Teh Chee Ghee

    (School of Business, Accounting and Finance Department, Monash University Malaysia, Jalan Lagoon Selatan, 47500 Bandar Sunway, Selangor, Malaysia)

  • Murugasu Thangarajah

    (Department of Econometrics and Business Statistics, Monash University, Jalan Lagoon Selatan, Bandar Sunway, 47500 Subang Jaya, Selangor, Malaysia)

Abstract

This study seeks to present the relationship between executive compensation, dividend payout policy and ownership structure of listed firms in Malaysia. We examine a panel data on a sample of 300 of the largest Malaysian public listed companies (PLCs) on Bursa Malaysia for the years 2008 to 2014. Based on 2,009 firm-year observations, our results show consistent empirical positive evidence on the association between dividend payout and executive compensation across all models. However, the results are inconsistent with Bhattacharyya model of dividend payout. Further, there is evidence that government and family ownerships are positively associated with dividend payout. Our results show that the positive relationship between executive compensation and dividend payout is more evident in politically connected firms (PCON firms) which is consistent with the clientele (catering) theory.

Suggested Citation

  • Ravichandran K. Subramaniam & Teh Chee Ghee & Murugasu Thangarajah, 2020. "Executive Compensation, Ownership Structure and Dividend Payout: Evidence from Malaysia," Asian Academy of Management Journal of Accounting and Finance (AAMJAF), Penerbit Universiti Sains Malaysia, vol. 16(2), pages 47-75.
    • Handle: RePEc:usm:journl:aamjaf01602_47-75
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    1. Ravichandran K. Subramaniam & Khakan Najaf & Murugasu Thangarajah, 2022. "Board Governance, Dividend Payout and Executive Compensation in Malaysian Firms," Capital Markets Review, Malaysian Finance Association, vol. 30(1), pages 17-35.

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