Effects Of Largest Shareholders On Dividend: A Study On Malaysian Firms
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Date
2015
Authors
Yeo, Jeng Fatt
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Abstract
The purpose of this study is to identify the effects of the largest shareholder (LO) and the second largest shareholder (LO2) on the dividend policy in Malaysian firms. The sample consists of Malaysian firms listed on Bursa Malaysia over the period 2008 – 2014. Panel data set were gathered from Bursa Malaysia whereby the sample firms consist of 762 firms for a period of seven years. The results show a statistically significant positive relationship between the largest shareholder (LO) and dividend pay-out for manager owned (MO) firms. As for the corporation owned (CO) firms, this study do not find any significant relationship between the largest shareholder (LO) and the dividend pay-out whilst for the second largest shareholder (LO2), this study notice that there is no significant relationship with the dividend pay-out for both MO firms and CO firms. Other factors which could affect the dividend pay-outs in Malaysian firms are cash, profitability of the firm, firm’s size and firm’s leverage level. Malaysian firms will have a higher dividend pay-outs when the amount of free cash available in the firm is high and higher profitability of the firm is being recorded. When taking the firm size into consideration, well established and large firms will have a higher dividend pay-out compared to smaller firms. On the other hand, firm’s leverage level shows a significant negative relation with the dividend pay-out. This means that a firm with higher debt level will pay a lower dividends or may register a zero dividend pay-out. In conclusion, if the type of firm is manager owned (MO) firm, this study found that the largest shareholder do affect the firm’s dividend policy for firms listed in Malaysia and as for corporation owned (CO) firms, this study found no significant relation between the largest shareholder and the firm’s dividend policy.
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Keywords
Effects Of Largest Shareholders On Dividend , On Malaysian Firms