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Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia

Drawing upon preceding empirical studies on the potential endogeneity of both debt and dividends in developed markets, this study investigates two-way causal relationships that can exist between payout decisions and debt policies in Malaysian listed companies. The analysis is performed by applying a...

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Main Authors: Ghasemi, Maziar, Ab Razak, Nazrul Hisyam, Muhammad, Junaina
Format: Article
Language:English
Published: University of Wollongong, Australia 2018
Online Access:http://psasir.upm.edu.my/id/eprint/60596/1/Dividends%2C%20leverage%20and%20endogeneity%20a%20simultaneous%20equations%20study%20on%20Malaysia.pdf
http://psasir.upm.edu.my/id/eprint/60596/
http://ro.uow.edu.au/aabfj/vol12/iss1/4/
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spelling my.upm.eprints.605962018-06-07T08:45:51Z http://psasir.upm.edu.my/id/eprint/60596/ Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia Ghasemi, Maziar Ab Razak, Nazrul Hisyam Muhammad, Junaina Drawing upon preceding empirical studies on the potential endogeneity of both debt and dividends in developed markets, this study investigates two-way causal relationships that can exist between payout decisions and debt policies in Malaysian listed companies. The analysis is performed by applying a simultaneous equations model (SEM) on a sample of 267 listed firms on the Main board of Bursa Malaysia during 2006–2014. The main findings indicate that when dividend is treated as endogenous, there is a positive impact on leverage. However, leverage is found to have a simultaneous negative impact on dividends. The findings also show that liquidity and performance positively affect dividends, although they have a negative effect on leverage. Additionally, this study documents an inverse relation between tangibility and debt, a direct relation between reputation and debt, and also confirms that larger firms tend to pay out a higher percentage of dividends per share. University of Wollongong, Australia 2018 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/60596/1/Dividends%2C%20leverage%20and%20endogeneity%20a%20simultaneous%20equations%20study%20on%20Malaysia.pdf Ghasemi, Maziar and Ab Razak, Nazrul Hisyam and Muhammad, Junaina (2018) Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia. Australasian Accounting, Business and Finance Journal, 12 (1). pp. 47-64. ISSN 1834-2000; ESSN: 1834-2019 http://ro.uow.edu.au/aabfj/vol12/iss1/4/ 10.14453/aabfj.v12i1.4
institution Universiti Putra Malaysia
building UPM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Putra Malaysia
content_source UPM Institutional Repository
url_provider http://psasir.upm.edu.my/
language English
description Drawing upon preceding empirical studies on the potential endogeneity of both debt and dividends in developed markets, this study investigates two-way causal relationships that can exist between payout decisions and debt policies in Malaysian listed companies. The analysis is performed by applying a simultaneous equations model (SEM) on a sample of 267 listed firms on the Main board of Bursa Malaysia during 2006–2014. The main findings indicate that when dividend is treated as endogenous, there is a positive impact on leverage. However, leverage is found to have a simultaneous negative impact on dividends. The findings also show that liquidity and performance positively affect dividends, although they have a negative effect on leverage. Additionally, this study documents an inverse relation between tangibility and debt, a direct relation between reputation and debt, and also confirms that larger firms tend to pay out a higher percentage of dividends per share.
format Article
author Ghasemi, Maziar
Ab Razak, Nazrul Hisyam
Muhammad, Junaina
spellingShingle Ghasemi, Maziar
Ab Razak, Nazrul Hisyam
Muhammad, Junaina
Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia
author_facet Ghasemi, Maziar
Ab Razak, Nazrul Hisyam
Muhammad, Junaina
author_sort Ghasemi, Maziar
title Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia
title_short Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia
title_full Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia
title_fullStr Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia
title_full_unstemmed Dividends, leverage and endogeneity: a simultaneous equations study on Malaysia
title_sort dividends, leverage and endogeneity: a simultaneous equations study on malaysia
publisher University of Wollongong, Australia
publishDate 2018
url http://psasir.upm.edu.my/id/eprint/60596/1/Dividends%2C%20leverage%20and%20endogeneity%20a%20simultaneous%20equations%20study%20on%20Malaysia.pdf
http://psasir.upm.edu.my/id/eprint/60596/
http://ro.uow.edu.au/aabfj/vol12/iss1/4/
_version_ 1643837405372874752
score 13.211869

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