Dividend payout policies of politically connected firms: Evidence from Malaysia
Document Type
Article
Publication Date
12-1-2021
Abstract
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.
Keywords
Politically connected firms, Government-linked companies, Dividend payout policy, Signaling theory
Divisions
finance
Funders
University of Malaya Faculty Research Grant [GPF006I-2018]
Publication Title
Borsa Istanbul Review
Volume
21
Issue
4
Publisher
Elsevier
Publisher Location
RADARWEG 29, 1043 NX AMSTERDAM, NETHERLANDS