Dividend payout policies of politically connected firms: Evidence from Malaysia

Zainudin, Rozaimah and Khaw, Karren Lee-Hwei (2021) Dividend payout policies of politically connected firms: Evidence from Malaysia. Borsa Istanbul Review, 21 (4). pp. 384-393. ISSN 2214-8450, DOI https://doi.org/10.1016/j.bir.2020.12.005.

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This study expounds on the debate regarding dividend payouts for different types of politically tied firms in Malaysia. We recognize the heterogeneity of political ties of politically connected firms (PCFs) by government-linked companies (GLCs) and non-GLC PCFs. The results show that PCFs are positively related to dividend payouts and that PCFs, specifically GLCs, pay higher dividends than their counterparts. Additionally, our results demonstrate that high-and low-levered GLCs consistently pay higher dividends than non-GLC PCFs and non-PCFs. These findings imply that GLCs implement special dividend policies, and therefore, a high GLC payout might not be indicative of actual performance. In brief, shareholders and potential investors should be cautious in interpreting firm payout signals. Copyright (C) 2020, Borsa Istanbul Anonim Sirketi. Production and hosting by Elsevier B.V.

Item Type: Article
Funders: University of Malaya Faculty Research Grant [GPF006I-2018]
Uncontrolled Keywords: Politically connected firms; Government-linked companies; Dividend payout policy; Signaling theory
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HF Commerce > Business
H Social Sciences > HG Finance
Divisions: Faculty of Business and Economics > Department of Finance
Depositing User: Ms Zaharah Ramly
Date Deposited: 14 Apr 2022 02:10
Last Modified: 14 Apr 2022 02:10
URI: http://eprints.um.edu.my/id/eprint/26917

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