What determines dividend policy in high leverage firms in Malaysia?
List of Authors
  • Noorhayati Yusof Ali , Zuraida Mohamad

Keyword
  • Dividend policy, leverage, highly leveraged firms, firm size, profitability

Abstract
  • This study aims to identify the important determinants of dividend policy in highly leveraged firms in Malaysia. The paper builds upon limited evidence that employs a panel data analysis of 55 highly leveraged firms from construction and property sector listed on Bursa Malaysia for the financial year from 2005 to 2014 comprising of 550 observations. The study employs multiple regression analysis to evaluate the association proposed in the hypotheses. The results support the hypothesis that profitability, liquidity and dividend yield significantly associated to dividend policy decision. The findings also reveal that profitability is negatively and significantly related to dividend policy in highly leveraged firms, subsequently refuted the assertion that highly profitable firms distribute higher dividend to their stockholders. Liquidity and dividend yield are found to be positively and strongly associated to dividend policy. Lastly, other firm specific features specifically size and leverage are found to be insignificant in dividend policy determination.

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