Contents
TOC o “1-3” h z u Chapter 1: Research Overview PAGEREF _Toc519072377 h 31.1 Introduction PAGEREF _Toc519072378 h 31.2 Background of the study PAGEREF _Toc519072379 h 31.2.1 Dividend Policy in Malaysia PAGEREF _Toc519072380 h 31.3 Problem Statement PAGEREF _Toc519072381 h 41.4 Research Objectives PAGEREF _Toc519072382 h 51.4.1 General Objective PAGEREF _Toc519072383 h 51.4.2 Specific Objectives PAGEREF _Toc519072384 h 51.5 Research Questions PAGEREF _Toc519072385 h 51.6 Scope of study PAGEREF _Toc519072386 h 51.7 Significance contribution of study PAGEREF _Toc519072387 h 51.8 Limitation of study PAGEREF _Toc519072388 h 5Chapter 2 Literature Review PAGEREF _Toc519072389 h 62.1 Dividend Theory PAGEREF _Toc519072390 h 62.1.1 Agency Theory PAGEREF _Toc519072391 h 62.1.2 Signalling Theory PAGEREF _Toc519072392 h 62.1.3 Bird in Hand Theory PAGEREF _Toc519072393 h 62.1.4 Pecking Order Theory PAGEREF _Toc519072394 h 62.2 Review of Literature PAGEREF _Toc519072395 h 62.2.1 Dividend Policy & Leverage PAGEREF _Toc519072396 h 62.2.2 Dividend Policy & Liquidity PAGEREF _Toc519072397 h 62.2.3 Dividend Policy & Profitability PAGEREF _Toc519072398 h 62.2.4 Dividend Policy & Growth Opportunities PAGEREF _Toc519072399 h 62.2.5 Dividend Policy & Corporate Taxation PAGEREF _Toc519072400 h 62.2.6 Dividend Policy & Firm Size PAGEREF _Toc519072401 h 62.3 Hypotheses Development PAGEREF _Toc519072402 h 62.4 Research Framework PAGEREF _Toc519072403 h 6Chapter 3: Research Design Methodology PAGEREF _Toc519072404 h 73.1 Sample Selection PAGEREF _Toc519072405 h 73.1.1 Population PAGEREF _Toc519072406 h 73.1.2 Sampling Technique PAGEREF _Toc519072407 h 73.1.3 Sample PAGEREF _Toc519072408 h 73.2 Data Collection Method PAGEREF _Toc519072409 h 73.3 Description of Variables PAGEREF _Toc519072410 h 73.3.1 Independent Variable: Leverage PAGEREF _Toc519072411 h 73.3.2 Independent Variable: Liquidity PAGEREF _Toc519072412 h 73.3.3 Independent Variable: Profitability PAGEREF _Toc519072413 h 73.3.4 Independent Variable: Growth Opportunities PAGEREF _Toc519072414 h 73.3.5 Independent Variable: Corporate Taxation PAGEREF _Toc519072415 h 73.3.6 Dependent Variable: Dividend Policy PAGEREF _Toc519072416 h 73.3.7 Control Variable: Firm Size PAGEREF _Toc519072417 h 73.4 Data Analysis PAGEREF _Toc519072418 h 73.4.1 Descriptive Analysis PAGEREF _Toc519072419 h 73.4.2 Normality Test PAGEREF _Toc519072420 h 73.4.3 Correlation Analysis PAGEREF _Toc519072421 h 73.4.4 Multicollinearity PAGEREF _Toc519072422 h 73.4.5 Multiple Regression PAGEREF _Toc519072423 h 7References PAGEREF _Toc519072424 h 8

Chapter 1: Research Overview1.1 IntroductionDividend decision referring to decision in deciding the amount or portion of earnings to be distributed to the shareholders as a dividend as well as decide the amount to be retained by the company. Dividend distribution could be seen as a form of reward to the shareholders due to their willingness in financial investment contribution to the company, hence this method of reward could fulfil their objective in maximising their interest.
On the other hand, the level of investment opportunities will help the company in deciding the amount of earnings to be retained. Therefore, it is possible for the companies to develop and manage an optimum dividend policy divides the earnings into dividend and retained earnings.
Dividend policy is “the practice that management follows in making dividend pay out decisions or, in other words, the size and pattern of cash distributions over time to shareholders” ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “DOI” : “10.1108/RIBS-02-2014-0030”, “ISBN” : “RIBS-02-2014-0030.pdf”, “ISSN” : “2059-6014”, “PMID” : “42012058”, “abstract” : “Purpose u2013 This study aims to investigate the determinants of the dividend policy of public listed companies in Malaysia. The factors examined in this study include earnings, cash flows, free cash flows, debt level, growth, investment, size, largest shareholders, risk and lagged dividend. Design/methodology/approach u2013 Data were obtained from the relevant databases and annual reports of the sampled companies. The study examines a total of 147 listed companies. In analyzing the data, the study used fixed and random effects, pooled least squares model, robust standard errors on fixed effects and random-effects models. Findings u2013 The results revealed the five factors that are earnings, debt, size, investment and largest shareholder have a significant influence on dividend policy, with earnings, firm size and investment revealed to have a positive significant effect, while debt and large shareholders have a negative significant effect. Practical implications u2013 The findings from this study are useful to the boar…”, “author” : { “dropping-particle” : “”, “family” : “Yusof”, “given” : “Yusniliyana”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” }, { “dropping-particle” : “”, “family” : “Ismail”, “given” : “Suhaiza”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “Review of International Business and Strategy”, “id” : “ITEM-1”, “issue” : “1”, “issued” : { “date-parts” : “2016” }, “page” : “88-99”, “title” : “Determinants of dividend policy of public listed companies in Malaysia”, “type” : “article-journal”, “volume” : “26” }, “uris” : “http://www.mendeley.com/documents/?uuid=1003f5d1-25d9-4589-be6f-d1d9e6c44ded” } , “mendeley” : { “formattedCitation” : “(Yusof & Ismail, 2016)”, “plainTextFormattedCitation” : “(Yusof & Ismail, 2016)”, “previouslyFormattedCitation” : “(Yusof & Ismail, 2016)” }, “properties” : { }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }(Yusof & Ismail, 2016). In decade, dividend decisions raise financial issue and it is one of the top ten complex matters in finance, due to its expressive effect towards investment and financial decision ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “DOI” : “10.17485/ijst/2016/v9i15/90568”, “ISSN” : “09745645”, “abstract” : “Background/Objectives: This topic on the impact of dividend policy on shareholders wealth of the companies is one of the most researched topics in finance. The main objective of this paper is to find out the dividend policy’s impact on shareholders wealth. Method/Statistical Analysis: The ten companies listed in NIFTY PHARMA of NSE have been considered for the study. Fifteen years data have been used (2001 to 2015). With the help of previous literature, MPS (Market Price Per Share) used to measure Shareholders wealth and the predictor variables are Price Earnings Ratio (PER), Dividend Per Share (DPS), Earnings Per Share (EPS), Total Assets (TA) and Cash and Bank Balance by Total Assets (CABBBYTA) were used by representing Dividend, Risk, Earnings, Firm Size and Liquidity of the companies. The Descriptive statistics and Normality test (Jarque – Bera) test found that the data were normally distributed. The conditions for regression like viz., Breusch-Pagan-Godfrey Heteroskedasticity Test, Breusch-Godfrey Serial Correlation LM Test, VIF for Multicollinearity, Augmented Dickey-Fuller test for unit root were used and found that the data were homogenous, free from auto correlation, multicollinearity and unit root. Eviews 7 Econometrics software package was used. Findings: Regression results show that the dividend, risk and liquidity of the companies impact shareholders wealth. Size and Earnings of the companies were insignificant with the shareholders wealth.”, “author” : { “dropping-particle” : “”, “family” : “Thirumagal”, “given” : “P. G.”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” }, { “dropping-particle” : “”, “family” : “Vasantha”, “given” : “S.”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “Indian Journal of Science and Technology”, “id” : “ITEM-1”, “issue” : “15”, “issued” : { “date-parts” : “2016” }, “title” : “Dividend policy on shareholders wealth-evidences from Indian pharmaceutical industry”, “type” : “article-journal”, “volume” : “9” }, “uris” : “http://www.mendeley.com/documents/?uuid=307325d8-d67f-478c-8c6e-4a28efbf903d” } , “mendeley” : { “formattedCitation” : “(Thirumagal ; Vasantha, 2016)”, “plainTextFormattedCitation” : “(Thirumagal ; Vasantha, 2016)”, “previouslyFormattedCitation” : “(Thirumagal ; Vasantha, 2016)” }, “properties” : { }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }(Thirumagal & Vasantha, 2016).
Yusof & Ismail (2016) expressed that the companies would be relied and depends more on debt or other external financing method in the case if the companies pay extremely high dividend, since it would result in less retained earnings to finance the future profitable project or investments. In contrast, the company’s dependence on the external financing would be reduce if the companies decide to pay fewer dividend, indicate that the company will have more internal earnings for future project plans.
The evolution of dividend policy has been started by Litner (1956), in which introduce with the Litner Model.
1.2 Background of the study1.2.1 Dividend Policy in MalaysiaBursa Malaysia website (2018) has been provided with guidance on setting Dividend Policy for public listed companies in Malaysia in which can be considered by the companies in managing company’s level of dividend’s payment. The factors that mentioned in was including the level of availability of liquidity in the companies, return on equity (ROE) and retained earnings of the companies, as well as companies levels of capital expenditure and plans on other investment, if any.

1.3 Problem StatementWhile Bursa Malaysia (2018) has provided the public listed companies in Malaysia with the guidance on factors to be considered for dividend policy decision, Focus Malaysia (2017) however highlighted that Malaysian public listed companies seem not show their interest in maximizing shareholder’s wealth, since they do not even establish with their dividend policy in explaining the cash dividend levels to pay as a percentage of their net yearly earnings.
Even there are many empirical research on determinants of dividend policy around the world either in developed economies or in emerging economies, however, there are no general consensus factors that can be considered for dividend policy decision ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “ISSN” : “2090-4274”, “abstract” : “Dividend policy is a decision made by an organization to determine the amount of dividend to be paid and the level of the profit to be retained. Prior studies claimed that dividend policy can help to reduce the agency problems in the organization. Thus, this decision is very important. However, todate, there is no general consensus on the factors which influence dividend policy. Therefore, this study aims to examine the determinants of dividend policy among public-listed firms in Malaysia. Secondary data was hand-collected from the annual reports of the listed firms for a period of five years. This study employs multiple regression to estimate the relationship between the determinants and dividend payout decisions. The results indicate that investment opportunity, liquidity and firm size significantly influence the dividend payout of Malaysian listed firms. This study contributes to the literature related to dividend payout in developing countries, specifically in the Malaysian business environment. It also provides information to the managers about how their decisions would affect the agency costs of the organization”, “author” : { “dropping-particle” : “”, “family” : “Mui”, “given” : “Yong Teck”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” }, { “dropping-particle” : “”, “family” : “Mustapha”, “given” : “Mazlina”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “Journal of Applied Environmental and Biological Sciences”, “id” : “ITEM-1”, “issue” : “March”, “issued” : { “date-parts” : “2016” }, “page” : “48-54”, “title” : “Determinants of Dividend Payout Ratio: Evidence from Malaysian Public Listed Firms”, “type” : “article-journal”, “volume” : “6” }, “uris” : “http://www.mendeley.com/documents/?uuid=d0aa192d-7ee8-4bfc-ab6b-fb6a912f6259” } , “mendeley” : { “formattedCitation” : “(Mui ; Mustapha, 2016)”, “plainTextFormattedCitation” : “(Mui ; Mustapha, 2016)”, “previouslyFormattedCitation” : “(Mui ; Mustapha, 2016)” }, “properties” : { }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }(Mui & Mustapha, 2016). In other words, there is no dividend policy can be familiarly accepted and hence, managers in the company will find it difficult in deciding the distribution of cash dividend to the shareholders.
Thus, this study aims to examine which determinants could influence dividend policy decision among public listed companies in Malaysia. This study tends to fill in the gap through extending the study done by the previous empirical research on determinants of dividend policy in Malaysia context by using the recent years’ data as well as in adding additional factors of Corporate Tax in determining dividend policy.

1.4 Research ObjectivesThe research objectives in this study was based on the problem above along together with the additional factors of Corporate Tax in determining dividend policy.

1.4.1 General ObjectiveTo examine factors that influence the Dividend Policy decision among Malaysia public listed companies.

1.4.2 Specific ObjectivesTo examine whether leverage has significant relationship with dividend policy.

To examine whether liquidity has significant relationship with dividend policy.

To examine whether profitability has significant relationship with dividend policy.

To examine whether investment opportunities has significant relationship with dividend policy.

To examine whether corporate tax has significant relationship with dividend policy.

1.5 Research QuestionsThe following research questions were addressed to gain and seek understanding the factors that influence Dividend Policy of Malaysia public listed companies.

Does leverage has significant relationship with dividend policy?
Does liquidity has significant relationship with dividend policy?
Does profitability has significant relationship with dividend policy?
Does investment opportunities has significant relationship with dividend policy?
Does corporate tax has significant relationship with dividend policy?
1.6 Scope of study1.7 Significance contribution of study1.8 Limitation of study
Chapter 2 Literature Review2.1 Dividend Theory2.1.1 Agency TheoryAgency theory views that the relationship was exist in link between the manager as an agent and owner as a shareholder. The relationship exist when the shareholder, who is the owner of wealth in the company engaged the agent to manage and control the wealth on their behalf. The principal-agent relationship has created a problem that the agent are not share the same interest as principal, hence conflict of interest problem arise. The principal and manager’s interest may be diverged, since agent seem the acceptance of the agent status give them opportunity in maximize their own interest and utility. The principal need to incur cost in monitoring the behaviour of the agent, so that the agent will act in the best interest of the principal. This cost incurred by the principal known as agency cost. Since separation of ownership and control between principal and agent will rise the agency cost bear by the principal, therefore, dividend policy is one of the alternative that was believed in reducing agency cost ADDIN CSL_CITATION { “citationItems” : { “id” : “ITEM-1”, “itemData” : { “ISSN” : “2090-4274”, “abstract” : “Dividend policy is a decision made by an organization to determine the amount of dividend to be paid and the level of the profit to be retained. Prior studies claimed that dividend policy can help to reduce the agency problems in the organization. Thus, this decision is very important. However, todate, there is no general consensus on the factors which influence dividend policy. Therefore, this study aims to examine the determinants of dividend policy among public-listed firms in Malaysia. Secondary data was hand-collected from the annual reports of the listed firms for a period of five years. This study employs multiple regression to estimate the relationship between the determinants and dividend payout decisions. The results indicate that investment opportunity, liquidity and firm size significantly influence the dividend payout of Malaysian listed firms. This study contributes to the literature related to dividend payout in developing countries, specifically in the Malaysian business environment. It also provides information to the managers about how their decisions would affect the agency costs of the organization”, “author” : { “dropping-particle” : “”, “family” : “Mui”, “given” : “Yong Teck”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” }, { “dropping-particle” : “”, “family” : “Mustapha”, “given” : “Mazlina”, “non-dropping-particle” : “”, “parse-names” : false, “suffix” : “” } , “container-title” : “Journal of Applied Environmental and Biological Sciences”, “id” : “ITEM-1”, “issue” : “March”, “issued” : { “date-parts” : “2016” }, “page” : “48-54”, “title” : “Determinants of Dividend Payout Ratio: Evidence from Malaysian Public Listed Firms”, “type” : “article-journal”, “volume” : “6” }, “uris” : “http://www.mendeley.com/documents/?uuid=d0aa192d-7ee8-4bfc-ab6b-fb6a912f6259” } , “mendeley” : { “formattedCitation” : “(Mui ; Mustapha, 2016)”, “plainTextFormattedCitation” : “(Mui ; Mustapha, 2016)”, “previouslyFormattedCitation” : “(Mui ; Mustapha, 2016)” }, “properties” : { }, “schema” : “https://github.com/citation-style-language/schema/raw/master/csl-citation.json” }(Mui & Mustapha, 2016).
2.1.2 Signalling Theory2.1.3 Bird in Hand Theory2.1.4 Pecking Order Theory2.2 Review of Literature2.2.1 Dividend Policy & Leverage2.2.2 Dividend Policy & Liquidity2.2.3 Dividend Policy & Profitability2.2.4 Dividend Policy & Growth Opportunities2.2.5 Dividend Policy & Corporate Taxation2.2.6 Dividend Policy & Firm Size2.3 Hypotheses Development2.4 Research Framework
Chapter 3: Research Design Methodology3.1 Sample Selection3.1.1 Population3.1.2 Sampling Technique3.1.3 Sample3.2 Data Collection Method3.3 Description of Variables3.3.1 Independent Variable: Leverage3.3.2 Independent Variable: Liquidity3.3.3 Independent Variable: Profitability3.3.4 Independent Variable: Growth Opportunities3.3.5 Independent Variable: Corporate Taxation3.3.6 Dependent Variable: Dividend Policy3.3.7 Control Variable: Firm Size3.4 Data Analysis3.4.1 Descriptive Analysis3.4.2 Normality Test3.4.3 Correlation Analysis3.4.4 Multicollinearity3.4.5 Multiple Regression
ReferencesADDIN Mendeley Bibliography CSL_BIBLIOGRAPHY Mui, Y. T., & Mustapha, M. (2016). Determinants of Dividend Payout Ratio: Evidence from Malaysian Public Listed Firms. Journal of Applied Environmental and Biological Sciences, 6(March), 48–54.

Thirumagal, P. G., & Vasantha, S. (2016). Dividend policy on shareholders wealth-evidences from Indian pharmaceutical industry. Indian Journal of Science and Technology, 9(15). https://doi.org/10.17485/ijst/2016/v9i15/90568
Yusof, Y., & Ismail, S. (2016). Determinants of dividend policy of public listed companies in Malaysia. Review of International Business and Strategy, 26(1), 88–99. https://doi.org/10.1108/RIBS-02-2014-0030

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