DIVIDEND POLICY IN MALAYSIA: A COMPARISON OF DETERMINANTS PRE AND POST MALAYSIAN CODE ON CORPORATE GOVERNANCE

  • Mohd Ashari Bakri Labuan Faculty of International Finance, Universiti Malaysia Sabah
  • Mohamad Isa Abd Jalil Labuan Faculty of International Finance, Universiti Malaysia Sabah
  • Zakiah Hassan Labuan Faculty of International Finance, Universiti Malaysia Sabah

Abstract

This study was aimed at examining the differences between dividend policy determinants pre- and post-Malaysian Code on Corporate Governance (MCCG) 2012. Several factors, including profitability, lagged dividend, free cash flow, debt, firm size, investment opportunities and market risk were tested. The study investigated a total number of 631 non-financial firms in Malaysia that covered 7830 firm-year observations from 2005 to 2011 (pre-MCCG) and from 2013 to 2019 (post-MCCG). The study used pooled Ordinary Least Square (OLS) and random and fixed effect, with a robust standard error. The results demonstrated that from seven factors tested only four factors were found to be significant in determining dividend policy in pre-MCCG, and five factors in post MCCG. The pre-MCCG test revealed that before the revised MCCG 2012, the factors determining dividend policy were as follows: profitability, lagged dividend, debt, and firm size. However, there were slight changes in the range of determinants affecting dividend policy, Post-MCCG 2012. The post MCCG test revealed that profitability, lagged of dividend, and firm size consistently determined firm dividend policy; however, debt was no longer a significant determinant of dividend policy post MCCG. Additionally, investment opportunity and market risk were found to be significant determinants of dividend policy post-MCCG in 2012.

Published
2021-06-15
How to Cite
BAKRI, Mohd Ashari; ABD JALIL, Mohamad Isa; HASSAN, Zakiah. DIVIDEND POLICY IN MALAYSIA: A COMPARISON OF DETERMINANTS PRE AND POST MALAYSIAN CODE ON CORPORATE GOVERNANCE. International Journal of Banking and Finance, [S.l.], v. 16, n. 2, p. 1-22, june 2021. ISSN 1675-722X. Available at: <http://e-journal.uum.edu.my/index.php/ijbf/article/view/ijbf2021.16.2.1>. Date accessed: 20 sep. 2021. doi: https://doi.org/10.32890/ijbf2021.16.2.1.