Dividend policy: Evidence from public listed companies in Malaysia

Abstract

This paper examines the dividend policy of 100 Malaysian public listed companies. The characteristics of the dividend-paying companies are identified, such as profitability, growth opportunities, firm risk, size, leverage and share distribution. Using coefficient of correlation method, dividend-paying companies are found to be relatively more profitable, less risky, matured and stable as compared to non dividend-paying companies. The information conveyed by dividend policy reflects the historical performance of the companies and not future performance prediction as suggested by signalling theory. Dividend policy of Malaysian public listed companies is rigid and sticky as managers are reluctant to cut or avoid omitting dividend even when the performance of the companies is deteriorating.

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