Executive Compensation, Ownership Structure and Dividend Payout: Evidence from Malaysia

This study seeks to present the relationship between executive compensation, dividend payout policy and ownership structure of listed firms in Malaysia. We examine a panel data on a sample of 300 of the largest Malaysian public listed companies (PLCs) on Bursa Malaysia for the years 2008 to 2014. Based on 2,009 firm-year observations, our results show consistent empirical positive evidence on the association between dividend payout and executive compensation across all models. However, the results are inconsistent with Bhattacharyya model of dividend payout. Further, there is evidence that government and family ownerships are positively associated with dividend payout. Our results show that the positive relationship between executive compensation and dividend payout is more evident in politically connected firms (PCON firms) which is consistent with the clientele (catering) theory.

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The Relationship between Ownership Structure and Dividend Policy: An Application in Vietnam Stock Exchange

Academic Journal of Interdisciplinary Studies ◽

10.2478/ajis-2019-0025 ◽

2019 ◽

Vol 8 (2) ◽

pp. 131-146

Author(s):

Thi Xuan Anh Tran ◽

Quoc Tuan Le

Keyword(s):

Ownership Structure ◽

Institutional Investors ◽

Stock Exchange ◽

Payout Policy ◽

Ownership Concentration ◽

H Index ◽

Dividend Payout ◽

Listed Firms ◽

Ownership Composition ◽

The Relationship

Abstract This research examines the possible association between ownership structure and Vietnam listed companies’ dividend payout policy over the period of 2009 – 2015. We have investigated 642 listed firms in Hochiminh stock exchange and Hanoi stock exchange, using pannel data analysis. Ownership structure is described with two main sub-variables: ownership concentration and ownership composition. Specifically, the Herfindahl index (or H-index) was applied to measure the level of ownership concentration /dispersion for all major shareholders in the company, including the five biggest investors, corporate institutional investors, the ownership concentration level, and foreign investors. It has been observed that the H-index of all major shareholders has an average of less than 0.5 but the value of the H-index of institutional investors at 0.594 indicates that institutional investors are more likely to be concentrated in the hands of large institutional investors. The result showed linear relationship between institutional ownership and the dividend rate, but not statistically significant for the relationship between managerial ownership and dividend payout ratio.

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The impact of board composition and ownership structure on dividend payout policy: evidence from Saudi Arabia

International Journal of Emerging Markets ◽

10.1108/ijoem-05-2021-0791 ◽

2021 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Helmi A. Boshnak

Keyword(s):

Saudi Arabia ◽

Ownership Structure ◽

Dividend Policy ◽

Payout Policy ◽

Board Composition ◽

Dividend Payout ◽

Content Type ◽

Listed Firms ◽

Propensity To Pay ◽

The Impact

PurposeThis study examines the impact of board composition and ownership structure variables on dividend payout policy in Saudi Arabian firms. In particular, it aims to determine the effect of board size, independence and meeting frequency, in addition to chief executive officer (CEO) duality, and state, institutional, managerial, family, and foreign ownership on both the propensity to pay dividends and dividend per share for Saudi-listed firms over the period 2016–2019.Design/methodology/approachThe paper captures dividend policy with two measures, propensity to pay dividends and dividend per share, and employs a range of regression methods (logistic, probit, ordinary least squares (OLS) and random effects regressions) along with a two-stage least squares (2SLS) model for robustness to account for heteroscedasticity, serial correlation and endogeneity issues. The data set is a large panel of 280 Saudi-listed firms over the period 2016 to 2019.FindingsThe results underline the importance of board composition and the ownership structure in explaining variations in dividend policy across Saudi firms. More specifically, there is a positive relationship between the propensity to pay dividends and board-meeting frequency, institutional ownership, firm profitability and firm age, while the degree of board independence, firm size and leverage exhibit a negative relation. Further, dividend per share is positively related to board meeting frequency, institutional ownership, foreign ownership, firm profitability and age, while it is negatively related to CEO duality, managerial ownership, and firm leverage. There is no evidence that family ownership exerts an impact on dividend payout policy in Saudi firms. The findings of this study support agency, signalling, substitute and outcome theories of dividend policy.Research limitations/implicationsThis study offers an important insight into the board characteristic and ownership structure drivers of dividend policy in the context of an emerging market. Moreover, the study has important implications for firms, managers, investors, policymakers, and regulators in Saudi Arabia.Originality/valueThis paper contributes to the existing literature by providing evidence on four board and five ownership characteristic drivers of dividend policy in Saudi Arabia as an emerging stock market, thereby improving on less comprehensive previous studies. The study recommends that investors consider board composition and ownership structure characteristics of firms as key drivers of dividend policy when making stock investment decisions to inform them about the propensity of investee firms to pay dividends and maintain a given dividend policy.

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The Effect of Corporate Governance and Ownership Structure on Financial Performance of Listed Companies in Nepal

Journal of Nepalese Business Studies ◽

10.3126/jnbs.v12i1.28148 ◽

2019 ◽

Vol 12 (1) ◽

pp. 1-18

Author(s):

Surya Bahadur G. C. ◽

Ravindra Prasad Baral

Keyword(s):

Corporate Governance ◽

Panel Data ◽

Least Squares ◽

Ownership Structure ◽

Stock Exchange ◽

Listed Companies ◽

Ownership Concentration ◽

Data Set ◽

Listed Firms ◽

And Performance

The paper attempts to analyze relationships among corporate governance, ownership structure and firm performance in Nepal. The study comprises of panel data set of 25 firms listed at Nepal Stock Exchange (NEPSE) covering a period of five years from 2012 to 2016. The econometric methodology for the study consists primarily of least squares dummy variable (LSDV) model, fixed and random effects panel data models and two-stage least squares (2SLS) model. The study finds bi-directional relationship between corporate governance and performance. Among corporate governance internal mechanisms; smaller board size, higher proportion of independent directors, reducing ownership concentration, improving standards of transparency and disclosure, and designing appropriate director compensation package are important dimensions that listed firms and regulators in Nepal should focus on. Ownership concentration is found to have positive effect on performance; however, it affects corporate governance negatively. This study raises understanding and provides empirical evidence for endogenous relationship between corporate governance and performance and offers support for principal-principal agency relationship. The results of this study lead to several practical implications for listed firms as well as policymakers of Nepal in promoting sound corporate governance practices and codes. For listed companies, the improvement in compliance with a code of corporate governance or voluntary adoption of best practices can provide a means of achieving improved performance.

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Ownership structure, dividend policy, and financial performance: A causality analysis

Corporate Ownership and Control ◽

10.22495/cocv18i3art13 ◽

2021 ◽

Vol 18 (3) ◽

pp. 161-174

Author(s):

Anis El Ammari

Keyword(s):

Corporate Governance ◽

Panel Data ◽

Financial Performance ◽

Ownership Structure ◽

Dividend Policy ◽

Causal Link ◽

Causality Analysis ◽

Listed Firms ◽

Causality Tests ◽

The Relationship

Most studies on corporate governance testing the relationship or correlation between ownership structure (OS), dividend policy (DP), and financial performance (FP). Little attention has, however, been paid to the direction of the causal relationship between financial performance and corporate governance variables (such as OS and DP). This study fills that gap by examining the direction of causality using the bootstrap panel Granger non causality tests to analyze panel data on selected listed firms in an emerging economy, namely, Tunisia. Based on a sample of 154 firm-year observations during the period 1996–2017 and using both Kónya’s (2006) and Dumitrescu and Hurlin’s (2012) approaches, results show the existence of both unidirectional and bidirectional significant causal link between the pair of used variables. These findings agree with earlier studies that found that causality runs from some corporate governance measures to financial performance, from the latter to the former, or in both senses

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Corporate governance and dividend payout policy: A study of KSE listed firms of Pakistan

Corporate Ownership and Control ◽

10.22495/cocv13i1c1p4 ◽

2015 ◽

Vol 13 (1) ◽

pp. 175-183

Author(s):

Muhammad Arslan ◽

Rashid Zaman

Keyword(s):

Corporate Governance ◽

Payout Policy ◽

Dividend Payout ◽

Listed Firms ◽

Corporate Size ◽

Report Quality ◽

Meaningful Relationship ◽

Promising Area ◽

The Relationship

In recent years corporate governance has become promising area of research. The main objective of this study is to determine the relationship between corporate governance and payout policies. The study used the data of 100 KSE listed companies for the period of year 2007 to 2013. The advanced level of statistical methods are employed, consist of logic regression analysis and the comparative average of various groups. The corporate governance index includes the ratio of non-duty members of the board, board size, the dual responsibility of the CEO, the amount of stock owned by institutional investors, size of the auditing company, audit report quality and auditor replacement. Results of this study suggest that dividend is the result of the quality of corporate governance, and in companies where the rights of shareholders are not observed; opportunistic directors employ free flowing funds to invest in projects and fields that enhance their own prestige, grandeur and reputation. Biphasic results showed a meaningful correlation between the profitability of operations, liquidity, asset structure, corporate size and financial leverage and the payout policy. A relatively weak relationship exists between asset structure dividend payout policy while no meaningful relationship exists between growth opportunities and the latter.

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Earnings manipulations in politically influenced firms

Corporate Ownership and Control ◽

10.22495/cocv15i1art6 ◽

2017 ◽

Vol 15 (1) ◽

pp. 65-71 ◽

Cited By ~ 2

Author(s):

Muhammad Sadiq ◽

Zaleha Othman

Keyword(s):

Corporate Governance ◽

Earnings Management ◽

Positive Relationship ◽

Stock Exchange ◽

Earnings Quality ◽

Listed Companies ◽

Large Sample ◽

Listed Firms ◽

Political Influences ◽

The Relationship

This paper investigates the relationship between political influences and earnings manipulations because little has been known about the relationship between both variables using multiple proxies. The authors measure earnings manipulation using models developed by Bhattacharya et al. (2003) and McNichols (2002), for a large sample of 129 listed firms in Pakistan Stock Exchange over the period 2009–2013. This study finds that politically influenced firms are involved in accruals earnings management and lack transparency, implying lower earnings quality. Our findings are consistent with prior studies, which show the positive relationship between political influences and earnings manipulations. However, the authors add contribution by using three proxies of political influences. The findings are useful for regulators to monitor earnings manipulations activities among public listed companies. In addition, the findings add to the growing literature in the field of corporate governance.

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Dividend Policy and Institutional Holdings: Evidence from Australia

International Journal of Financial Studies ◽

10.3390/ijfs8010012 ◽

2020 ◽

Vol 8 (1) ◽

pp. 12

Author(s):

Thao Nguyen ◽

Hui Li

Keyword(s):

Panel Data ◽

Institutional Investors ◽

Institutional Ownership ◽

Dividend Yield ◽

Dividend Payout ◽

Multivariate Tests ◽

Listed Firms ◽

Insignificant Effect ◽

Institutional Holdings ◽

The Relationship

This paper investigates the relationship between dividend payout and institutional ownership for all Australian listed firms in the period between 2001 and 2015. In our univariate tests, we find that institutional investors, in general, prefer dividend-paying firms more than non-paying firms, and for the dividend-paying firms in our sample, institutional investors hold more shares in the firms who pay higher dividends. We further explore the causality between dividend payout and institutional ownership in our multivariate tests with our panel data. The results show an insignificant effect of institutional ownership (dividend payout) on the future dividend payout (institutional ownership) while controlling for firms’ fundamentals, that a higher dividend yield does not attract more institutional investors and that there is no catering to Australian institutional investors.

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Executive Compensation And Ownership Structure

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v31i2.9156 ◽

2015 ◽

Vol 31 (2) ◽

pp. 593 ◽

Cited By ~ 2

Author(s):

Rim Ben Hassen ◽

Jihene El Ouakdi ◽

Abdelwahed Omri

Keyword(s):

Panel Data ◽

Executive Compensation ◽

Ownership Structure ◽

Stock Option ◽

Managerial Ownership ◽

Listed Firms ◽

Incentive Plans ◽

The Impact ◽

Stock Option Incentive

The objective of this paper is to highlight the impact of ownership discrepancy and type (managers, families, institutions) on executive compensation.Basedon a sample of French listed firms and using panel data regressions, the results show that capital concentration (Jensen 1986) negatively affects both the level of total executive compensation and the probability of use of stock option incentive plans. This confirms our theoretical alignment hypothesis. Moreover, the results show no evidence of the existence of a significant effect of ownership discrepancy on managerial compensation.Institutional shareholders are likely to encourage the use of stock option incentive plans and managerial ownership positively and significantly influences the level of total and fixed compensation. Family shareholding negatively affects executive compensation variables.

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