Dividends and corporate governance in Malaysia
The importance of dividend policy of firms in the capital market could not be understated (Mittal and Chopra, 2006). Although there is no one universal theory that could explain dividend policy (Anil and Sujjata, 2008), recent research emphasizes the agency theory is mainly used to explain corporate...
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| Format: | Thesis |
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2013
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| Summary: | The importance of dividend policy of firms in the capital market could not be understated (Mittal and Chopra, 2006). Although there is no one universal theory that could explain dividend policy (Anil and Sujjata, 2008), recent research emphasizes the agency theory is mainly used to explain corporate dividend policies (Eije and Megginson, 2008). In particular this thesis investigates the dividend substitution theory of La Porta, de-Silanes, Shleifer and Vishny (2000) in conjunction with the agency theory to determine if dividends act as substitute for weak governance in the developing Malaysian capital market. Corporate governance (CG) being encapsulated as a social process could not be inevitably disconnected from social and other non-economic factors like power, legislation and social relationship (Letza, 2006). A few Malaysian corporate governance past studies delved into the ‗bumiputera factor‘ (Becht et al. 2005), and there is an economic justification to study it as the subject of ‗bumiputera‘ provides indispensable lenses for studies of CG in Malaysia (Yusof et al. 2010). The existing literature on dividends and corporate governance can be divided into two streams of research; the first strand entails studying dividends and its relationship with Corporate Governance Indexes. However the second strand focuses on studying CG variables‘ individual effect on dividends payout. However most of the research evidence produced so far concentrated on the former. |
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