Dividend Policy and payout practices in Malaysia: A qualitative analysis

Abstract

Since stock prices reflect the firm's future earnings potentials (Miller and Rock, 1985), dividends announcements therefore convey new information to the market about the future prospects of the corporation. As such, the objective of the current study is t potential role that dividend payouts play in influencing the fund managers and investors in recommending or selecting a stock, and for various stocks' performance assessment. In addition, the study attempts to examine the possible effect of taxation on dividends payout. The study uses qualitative methods in form of semi structured interviews conducted with six Malaysian investment managers. The findings revealed that dividend payouts are not solely used as a basis for stock recommendation and assessment of companies' performance by fund managers in Malaysia. Furthermore, taxation was found to be significant in determining dividend payouts by companies in Malaysia. These findings have great contributions to the dividend policy theory, as well as to the practitioners and policy makers that are discussed in details at the end of the paper.

The Effect of Dividend Policy on the Market Value of the Jordanian Commercial and Islamic Banks Listed on the Amman Stock Exchange

“…The maximization of shareholder wealth is one of the most important objectives of companies by maximizing their value. Consequently, there are many decisions that can affect the company's value, such as financing decisions that determine whether they should rely on external financing such as debt, By using retained earnings instead of borrowing, and thus the trade-off between the distribution of profits or the holding of owners in order to reinvest them for expansion and growth (Said Omar & Echchabi, 2019).…”

A multi-criteria framework for comparing dividend pay capabilities: Evidence from Indian FMCG and consumer durable sector

“…Researcher found that the market reacts to the announcement of dividend which is indicated by the existence of abnormal return value which is directly proportion to increase and decrease in dividends which strengths the perspective of signalling theory. The work of Omar and Echchabi (2019) examined the potential role of dividend pay-out plays in influencing the fund managers in selecting and recommending a stock. Semi-structured interview method was conducted with six Malaysian investment manager and the results indicates that other factors coupled with dividend pay-out pays a catalyst for investors and fund managers to select a stock in their portfolio.…”

Kesempatan Investasi, Kebijakan Dividen dengan Firm Size sebagai Variabel Moderasi

“…Berdasarkan residual theory of dividend, pendanaan terhadap peluang investasi yang menguntungkan harus dilakukan terlebih dahulu sebelum dividen dibayarkan (Brigham & Gapenski, 1996dalam Usman, 2006 dan pembayaran dividen dilakukan apabila masih terdapat arus kas sisa (Omar & Echchabi, 2019). Hal tersebut dikarena perusahaan cenderung membiayai proyek investasi menggunakan dana internal (Bhagwat & Debruine, 2009dalam Yeo, 2018 daripada menggunakan dana eksternal karena lebih murah (Wulandari & Suardana, 2017), sehingga manajemen akan memilih menahan laba untuk investasi dibandingkan membagikan dividen dalam jumlah yang tinggi.…”