Moderating Effects Of Ownership Concentration On Relationship Between Firm Characteristics And Dividend Policy: Evidence From Public Companies Of Malaysia

Abstract

The main purpose of this research is to determine the moderating effects of ownership concentration
on relationship between five firm characteristics (profitability, liquidity, leverage, growth opportunities
and cash flows) and dividend policy for top 200 Public Listed Companies in Malaysia. The study is
carried out in a sample of 528 observations over the period 2013-2017. Secondary data are obtained
from iTrade@CIMB Stock Filter website, Thomson Reuter’s Data Stream and Bursa Malaysia’s
website. Normality and correlation test are conducted in order to confirm the reliability of data.
Multiple linear regression model is used to analyze the data and to answer the research questions and
research objectives. The findings of this research indicates that profitability is positively related to
dividend policy and growth opportunities is negatively related to dividend policy. Whereas, liquidity,
leverage and cash flow are found to be insignificant determinant of dividend policy. Ownership
concentration is shown to have significant moderating effects on the relationship of liquidity and growth
opportunities with dividend policy. Findings of this research have some implications for academicians,
policy makers, investors and board of directors. In a nutshell, the findings should encourage regulators,
board of directors and investors to look into corporate governance issues through active monitoring to
reinstate the integrity of the financial markets. Subsequently, this will attract and increase local and
foreign investments.