Family ownership and dividend payout in Malaysia

2016 ◽  
Vol 12 (3) ◽  
pp. 314-334 ◽  
Author(s):  
Samuel Jebaraj Benjamin ◽  
Shaista Wasiuzzaman ◽  
Helen Mokhtarinia ◽  
Niloufar Rezaie Nejad
Keyword(s):  
Agency Costs ◽  
Dividend Policy ◽  
Family Firms ◽  
Percent Level ◽  
Least Square ◽  
Family Ownership ◽  
Tobit Regression ◽  
Dividend Payout ◽  
Content Type ◽  
Share Ownership

Purpose – The purpose of this paper is to investigate the effects of family ownership on dividend payout from the perspective of agency costs in Malaysia. Design/methodology/approach – Annual financial, board and family ownership data of 160 firms listed on the Bursa Malaysia are collected for the period 2005-2010. Analyses are carried out using descriptive statistics, χ2 tests, Tobit regression and three-stage least square regression analysis. Findings – The empirical results suggest that family share ownership at the dispersed level from between 0 to 5 percent is negatively associated with dividend payout and positively associated from the 5 to 33 percent level with dividend payout. Consistent with the extant literature, the observed relationship between family share ownership and dividend payout is stronger in firms with smaller total assets (size), low debt and low-growth opportunities. Further examination of investment decisions lends support to arguments which attribute higher agency costs as a result of family ownerships. Research limitations/implications – The observed results at the different family ownership levels are attributed to the possible expropriation in family-owned firms and accordingly, to the proportional pressure by minority and other shareholders for dividend payout. Practical implications – For policy makers, findings from this study could serve to justify initiatives to further strengthen the institutional and regulatory architectures that would enhance the power of minority and other shareholders of public listed firms in Malaysia. Originality/value – This study contributes to the growing literature on dividend policy and family firms. Particularly, it provides further understanding of the effect of family ownership on dividend policy.

Financial reporting quality, family ownership, and investment efficiency

2019 ◽  
Vol 45 (4) ◽  
pp. 513-535 ◽  
Author(s):  
Faisal Shahzad ◽  
Ijaz Ur Rehman ◽  
Sisira Colombage ◽  
Faisal Nawaz
Keyword(s):  
Financial Reporting ◽  
Family Firms ◽  
Emerging Market ◽  
Reporting Quality ◽  
Least Square ◽  
Financial Reporting Quality ◽  
Family Ownership ◽  
Investment Efficiency ◽  
Content Type ◽  
The Impact

Purpose The purpose of this paper is to empirically investigate the impact of two monitoring mechanisms: family ownership (FO) and financial reporting quality (FRQ) on investment efficiency (IE) over the period of 2007–2014 for listed firms on the Pakistan Stock Exchange. Design/methodology/approach The authors employ two-dimensional pooled OLS cluster at the firm and year level, two-stage least square regression and feasible generalized lease square regression regression methods. Findings The findings suggest that higher FRQ and FO are associated with higher IE. Further, the authors report that higher FRQ and FO mitigate over- and under-investment. The impact of FRQ on IE is stronger (weaker) for family-controlled businesses. The results for these particular estimates are robust for alternative estimation techniques and measures of FRQ and FO. Originality/value The study draws on both agency and behavioral agency theories and therefore contributes to the literature in the following ways. First, the authors examine a relationship between FRQ and IE. Second, the authors test the impact of FO on IE. Third, the authors test the moderating impact of FO on the relationship between FRQ and the IE of family and non-family firms in relatively less regulated emerging market.

scholarly journals The effect of family business professionalization on dividend payout

2017 ◽  
Vol 24 (4) ◽  
pp. 971-990 ◽  
Author(s):  
Anneleen Michiels ◽  
Lorraine Uhlaner ◽  
Julie Dekker
Keyword(s):  
Control Systems ◽  
Family Involvement ◽  
Family Business ◽  
Family Firms ◽  
Tobit Regression ◽  
Dividend Payout ◽  
Content Type ◽  
Dividend Policies ◽  
Governance Systems ◽  
Privately Held

Purpose The topic of dividend policies of private family-controlled firms has aroused the interest of corporate finance and governance scholars and practitioners alike. However, a lot of questions concerning the dividends in privately held family firms remain unanswered. The purpose of this paper is to examine whether a private family firm’s dividend payout is influenced by its degree of professionalization. Design/methodology/approach The hypotheses are tested on a sample of 492 small to medium-sized Belgian family-controlled businesses with Tobit regression models. Findings The results show that professionalized family-controlled firms pay higher dividends to their shareholders than do less-professionalized firms. In particular, the use of financial control systems, non-family involvement in governance systems, and the use of human resource control systems have a positive significant impact on the average level of dividend payout. Practical implications This study may be of interest to family business consultants and (potential) investors, as the results contradict the assumption that family businesses (especially those privately held) will always have a no or low dividend policy. Originality/value Investigating dividend payout in the context of other components than family ownership (in this case, professionalization) can broaden our understanding of dividend payout.

Governance and long-term operating performance of family and non-family firms in Australia

2015 ◽  
Vol 32 (4) ◽  
pp. 398-421 ◽  
Author(s):  
Enver Halili ◽  
Ali Salman Saleh ◽  
Rami Zeitun
Keyword(s):  
Agency Costs ◽  
Family Firms ◽  
Conflicts Of Interest ◽  
Operating Performance ◽  
Survival Rates ◽  
Listed Companies ◽  
Family Ownership ◽  
Content Type ◽  
The Impact

Purpose – The purpose of this study is to conduct a comparative analysis of the long-term operating performance of family and non-family firms from the agency theoretic perspective. The analysis is focused on investigating the impact of family ownership on principal–agent conflicts of interest. Design/methodology/approach – This paper examines the relationship between firm operating performance and family ownership for a large sample of 677 Australian-listed companies. The paper uses the Generalised Method of Moments (GMM) estimator model developed by Arellano and Bond (1991) and used by other studies in finance (Baltagi, 2012; Bond, 2002; Mohamed et al., 2008). Findings – The empirical results show that firms with ownership concentration has a better operating performance due to the alignment of owner-management interests. This study also finds that family-listed companies have higher survival rates and perform better than non-family companies. Findings support the hypothesis that agency costs arise as a result of privileged access of information and self-interest behaviour of managers (outsiders) in firms with dispersed ownership structures. Originality/value – Earlier studies have only focused on short-term perspectives, particularly investigating small and medium types of Australian family businesses from narrow aspects, such as productivity, business behaviour, capital structure and leverage. Therefore, this paper has conducted a comparative examination of family and non-family firms listed on the Australian Stock Exchange (ASX) to identify the impact of agency costs on their financial performance.

Corporate social responsibility and dividend policy: a strategic choice in family firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Muhammad Fayyaz Sheikh ◽  
Aamir Inam Bhutta ◽  
Bareera Rehman ◽  
Muhammad Bazil ◽  
Ali Hassan
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Dividend Policy ◽  
Family Firms ◽  
Family Members ◽  
Dividend Payout ◽  
Content Type ◽  
Corporate Social ◽  
Propensity To Pay ◽  
The Relationship

PurposeThe purpose of this study is to examine whether corporate social responsibility (CSR) affects dividend policy (the propensity to pay dividends as well as the dividend payout ratio) and what role family ownership plays in this regard in an emerging market.Design/methodology/approachThe study uses a sample of 1,480 observations from Pakistan for the period 2010–2016 and accounts for Hackman self-selection bias and endogeneity issues using a robust regression analysis. CSR activity is measured by CSR score developed through a content analysis of firms' annual reports.FindingsThe study finds that the greater number of CSR activities increases the propensity to pay dividends, but reduces the dividend payout in dividend-paying firms. On the other hand, in family firms, the greater number CSR activities decreases the propensity to pay dividends, but increases the dividend payout in dividend-paying firms. The findings hold for a series of robustness and sensitivity checks, for example, alternative measures, specifications and estimators.Practical implicationsA trade-off between firms' CSR activities and dividend policy needs to be the point of concern for investors, minority shareholders and policy makers. The role of the non-executive and independent directors becomes more important, especially in the family firms where family members sitting on the boards may drive CSR activities in their own interests opportunistically. The potential opportunistic behaviour of family members warrants the need for policy reform initiatives to strengthen the protection of other stakeholders' interests.Originality/valueThe study highlights that family owners' efforts to preserve their socio-emotional wealth in family firms affect the relationship between CSR activities and dividend policy. Further, the relationship between CSR and dividend policy in emerging markets is different from developed markets. This study simultaneously focuses on both the propensity to pay dividends and the amount of dividend payment and documents that the implications of CSR are different for them.

The stability of dividends and its predictability: a cross-country analysis

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Rajesh Pathak ◽  
Ranjan Das Gupta
Keyword(s):  
Robustness Analysis ◽  
Least Square ◽  
Tobit Regression ◽  
Economic Cycle ◽  
Dividend Payout ◽  
Content Type ◽  
Country Analysis ◽  
Economic State ◽  
Changing Times ◽  
The Stability

PurposeThe authors examine the stability of dividend payout and the consistency in its predictability using sample of firms from 18 different countries amid their prevailing heterogeneous formal institutions (such as the legal system, corporate governance), the distinct state of economic development (developing vs developed) and changing times (during the crisis vs the noncrisis periods).Design/methodology/approachThe authors use tobit regression models with distinct specifications for the authors’ investigations. The authors alternately analyze the study’s results using Fama–Macbeth (FM) (1973) and generalized least square (GLS) regressions.FindingsThe authors show a sharply declining stability in dividend payout with time using DeAngelo and Roll’s (2015) framework. In terms of predictive consistency, the authors report that only a few idiosyncratic factors predict dividends consistently, and these results hold qualitatively true across the robustness analysis. The firm's liquidity appears to be the most consistent predictor of dividends payout, whereas firm's size being on the other extreme. The results signify that the idiosyncratic factors that matter for firm's dividend policy are not country specific. Instead, it reveals commonality of predictors grounded on characteristics of countries such as legal environment, investor's protection, economic state (ES) and economic cycle.Originality/valueThe authors contribute to the dividends literature by providing the evidence of dividend instability through time and disapproving the stylized fact of sticky dividends. Besides, the authors provide international evidence of inconsistent predictability of dividends.

Corporate governance and payout policy: evidence from India

2019 ◽  
Vol 19 (5) ◽  
pp. 1117-1132 ◽  
Author(s):  
Monika Rajput ◽  
Shital Jhunjhunwala
Keyword(s):  
Corporate Governance ◽  
Ownership Structure ◽  
Dividend Policy ◽  
Stock Exchange ◽  
Positive Influence ◽  
Family Ownership ◽  
Board Independence ◽  
Dividend Payout ◽  
Content Type ◽  
Significant Positive Influence

Purpose The purpose of this paper is to study the impact of ownership structure and corporate governance on dividend policy in emerging markets, like India. The study also analyses the moderation effects of board independence between ownership and dividend payout. Design/methodology/approach The data set of 1,546 Indian firms over the period of 2006-2017 has been used in this study. Tobit and logistic regression methods has been used. The data used in this study are collected from the Centre for Monitoring Indian Economy (CMIE) Prowess database. The sample firms are listed on Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). Findings First, the study finds a significant positive influence of corporate governance on the decision to pay dividend and is an important determinant of the payout decision. Second, the study finds a significant negative relationship of family ownership with dividend payout decisions which indicates that family firms pay lower dividend. Finally, the result from the interaction effect of board independence with family ownership has significant positive influence on dividend policy. Originality/value This is one of the first attempt to show that there is an interaction between independent board and ownership structure. It shows that more independent and non-executive directors in the board of family controlled firms are likely to pay more dividends.

The effect of institutional transition on entrepreneurial orientation of family businesses

2018 ◽  
Vol 26 (1) ◽  
pp. 76-97
Author(s):  
Amit Baran Chakrabarti ◽  
Arindam Mondal
Keyword(s):  
Family Business ◽  
Entrepreneurial Orientation ◽  
Family Firms ◽  
Emerging Market ◽  
Family Businesses ◽  
Least Square ◽  
Family Ownership ◽  
Content Type ◽  
Institutional Transition ◽  
The Impact

Purpose The purpose of this paper is to ascertain the impact of family ownership on the entrepreneurial orientation (EO) of firms in an emerging market and the contingencies under which it is likely to be affected. Design/methodology/approach The paper adopted a panel data multiple regression using ordinary least square methodology on a sample of 51,972 observations belonging to 12,250 firms from India. Findings The study finds that family businesses have higher EO than non-family firms. However, it is likely to be affected during institutional transition due to environmental uncertainty. Furthermore, during institutional transition, there will be differences in the EO of family business groups and stand-alone family firms due to the former’s ubiquitous network-level resource advantages. Research limitations/implications This paper contributes to the literature on family business by reconciling the positive and negative views on the effect of family ownership on EO by arguing that the risk-taking behavior of family firms is contingent on the environmental conditions and the resource position of the firm. Practical implications This study will enable managers and other stakeholders to predict the entrepreneurial attitude of family-owned firms during environmentally stable as well as turbulent times. Social implications This study highlights the implication of institutional transition through reforms on a vital part of the economy. Policy makers have to be sensitive to repercussions on family business due to environmental turbulence. Originality/value This is one of the first papers that investigate the influence of institutional transition and the resource position of Indian family firms on their EO.

Corporate Social Responsibility and Earnings Management: The Moderating Role of Family Ownership

2019 ◽  
Vol 12 (1) ◽  
Author(s):  
Asif Saeed ◽  
Aijaz Mustafa Hashmi ◽  
Attiya Yasmin Javid
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Earnings Management ◽  
Family Firms ◽  
Negative Impact ◽  
Stock Exchange ◽  
Least Square ◽  
Family Ownership ◽  
Corporate Social ◽  
The Impact

This study aims to explore the impact of family ownership on the relationship among corporate social responsibility (CSR) and earning management (EM) in Pakistan. Data is collected from nonfinancial listed firms on Pakistan Stock Exchange (PSE) for the period 2009-2017. Our results of pooled ordinary least square regression indicate that CSR has significant negative impact on EM. Furthermore, results also indicate that association between CSR and EM is moderated by family ownership. Family firms which perform CSR activities are less involved in EM as compare to nonfamily firms perform CSR activities. This variation in behavior of EM in family and non-family firms can possibly be explained by socioemotional wealth theory. Keywords: Corporate Social Responsibility, Earnings Management, Family Ownership

scholarly journals Limiting role of resource dependence: an examination of director interlocks, board meetings and family ownership

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Vidya Sukumara Panicker ◽  
Rajesh Srinivas Upadhyayula
Keyword(s):  
Board Of Directors ◽  
Resource Dependence ◽  
Family Firms ◽  
Emerging Market ◽  
Resource Provisioning ◽  
Independent Directors ◽  
Family Ownership ◽  
Independent Director ◽  
Content Type

PurposeThis paper attempts to examine the activity and involvement of board of directors in internationalization activities of firms in emerging markets, by evaluating the resource provisioning roles of interlocks provided by board of directors, and the frequency of board meetings. We demonstrate that the effectiveness of board involvement is contingent upon the levels of family ownership in firms since family ownership could impact the firm’s ability to utilize the presence of different types of board members.Design/methodology/approachThe authors test our hypotheses on a sample of listed Indian companies, extracted from the Prowess database published by the Centre for Monitoring Indian Economy (CMIE), a database of the financial performance of Indian companies. On a panel of 3,133 firm years of 605 unique Indian firms with foreign investments, over a time period of 2006–2017, the authors apply different estimation techniques.FindingsThe results demonstrate that both board meeting frequency and director interlocks are instrumental in supporting internationalization activities in emerging market firms. However, family ownership moderates the role of insider and independent interlocks on internationalization investments in different ways; the authors find that interlocks provided by independent directors support internationalization activities in family firms, whereas those provided by insider directors do not. Further, the study also finds that board meetings are less effective in internationalization of family firms.Practical implicationsThe authors conclude that family firms aiming at international diversification require to develop more connected and networked independent directors to enable internationalization in firms. While independent director interlocks enhance the international investments, it is also useful to know that board meetings are ineffective in utilizing the resources in family firms. This points to the possibility that family firms should device mechanisms to integrate family meetings with board meetings so that they can utilize the within-family processes to aid in their internationalization decisions.Originality/valueThe study contributes to resource dependence theory by understanding its limiting role in family firms. Theoretically, it helps delineate the limiting resource provision role of the insider directors vis-à-vis independent directors. The authors argue that the resource provision role of insider director interlocks does not effectively help in internationalization in comparison to independent director interlocks in family-dominated firms. Consequently, the study shows the limiting role of resource provision and utilization by family-owned firms in comparison to non-family-owned firms.

The strength of the board on sustainability assurance decisions

2017 ◽  
Vol 24 (4) ◽  
pp. 863-886 ◽  
Author(s):  
Jennifer Martinez-Ferrero ◽  
Lázaro Rodríguez-Ariza ◽  
Isabel María García-Sánchez
Keyword(s):  
Random Effects ◽  
Design Methodology ◽  
Family Firms ◽  
Positive Impact ◽  
Family Businesses ◽  
Family Ownership ◽  
Logit Models ◽  
Board Size ◽  
Content Type ◽  
Sustainability Reports

Purpose The purpose of this paper is to analyze how family ownership influences the strength of the board’s monitoring function in companies’ decisions regarding the assurance of sustainability reports. Design/methodology/approach The international sample consists of 536 companies operating in more stakeholder-oriented countries during the period 2007-2014. The paper proposes alternative logit models of analysis using the random-effects estimator. Findings The results provide evidence that a firm’s sustainability assurance and its choice of accounting professionals as higher quality assurers are positively associated with board size and independence. The main result is the positive impact of family businesses on these assurance issues. The paper evidences the greater orientation toward sustainability issues of family businesses. Furthermore, it verifies the greater impact of board size on family firms’ assurance demand. Originality/value This study sheds some light on the unexplored topic of sustainability assurance in family firms. One of the differentiating aspects with respect to previous studies is the consideration of the moderating factor of family property. This study also contributes to the understanding of family firms’ demand for assurance and its practitioners, and the literature’s focus on its determinants.

Sign in / Sign up

Export Citation Format

Share Document