Intra-industry comformity in dividend policy in Malaysia

• Main Author: Teh, Yen Kai
• Format: Thesis
• Language: English; English
• Published: 2015
• Subjects: HG Finance
• Online Access: https://etd.uum.edu.my/5561/1/s812941_01.pdf; https://etd.uum.edu.my/5561/2/s812941_02.pdf; https://etd.uum.edu.my/5561/

The topic on determinants of dividend policy has remained as a hot topic even though much relevant research had conducted. Every company wishes to increase their company's value by having a suitable dividend policy. The dividend policy of a company may be affected by other industry players due to the similar business environment. Besides, dividend decision can convey message to public about its performance which may indirectly affect a company's share price. Intra-industry effect on dividend policy was identified outside Malaysia. Since dividend is a crucial decision to a company, the same research should be conducted in Malaysia. The main purpose of this paper is to test the intra-industry effect on dividend policy in Malaysian market. In order to explore the influence of intra-industry effect, the logistic regression was performed by using the variables that may affect the probability of a company to pay dividend. The findings revealed a significant positive relationship between probability of a company paying a dividend and number of companies within plantation industry that pay a dividend. However, there is an insignificant relationship between probability of a company paying a dividend and number of companies within construction industry that pay a dividend. Overall, the findings support the view of intra-industry conformity in dividend policy in Malaysia. Thus, the intra-industry effect should be considered as one of the determinants in dividend policy. The findings are useful not only for investors but the company as well