Dividend Payout Policy Case Study

Twaijry(2007) studied the emerging market of Malaysia. The study confirmed that current dividends are affected by the past and future. Also, dividends were associated with net earnings but less strongly. Neither the age of the paying dividend company nor its home sector (industry and non-industry) had an impact on the amount paid on each share (DPS). However, size was found to have a significant effect on the DPS as compared to either the current, past or future net earnings.

Appannan and Sim (2011) in their study of Malaysia listed companies for food industries under the consumer products sector showed that variables having a strong relationship with dividend payout are not necessarily the determinants of the dividend payment decision such

However, the dividend tends to be more sensitive to current earnings than prior dividends. The listed non-financial firms having the high speed of adjustment and low target payout ratio show the instability in smoothing their dividend payments. It is found that the profitable firms with more stable net earnings can afford larger free cash flows and therefore pay larger dividends. Furthermore the ownership concentration and market liquidity have the positive impact on dividend payout policy. Besides, the investment opportunities and leverage have the negative impact on dividend payout policy. The market capitalization and size of the firms have the negative impact on dividend payout policy which shows that the firms prefer to invest in their assets rather than pay dividends to their shareholders. Okpara, Godwin Chigozie (2009), Investigate the factors determining dividend pay-out policy in Nigeria. To do this, factor analysis technique was first employed and then alternate econometric method used on the identified critical factors to ascertain the authenticity or validity of the identified factors. The results show that three factors-earnings, current ratio and last year’s dividends impact significantly on the dividend payout and dividend yield in Nigeria. Earnings exert a negative impact on the payout ratio indicating that they are apportioned to retention (as they increase) for the growth of the firm. While current ratio and the previous year’s dividend exert a positive impact on the payout ratio and dividend yield, showing firstly that firms are more willing to pay out dividends when they have no problem with meeting their short-term needs for cash, and secondly that firms try to increase their payout ratio from its previous level. The researchers therefore conclude that the three variables,