Dividend Behaviour in Malaysia

Abstract

The paper estimates the dividend behaviour model for Malaysia using the annual time series data for the period 1983 to 1992, and the cross-section data for the 23 selected firms representing various sectors of the economy. The results have good fits, and they indicate that the current earnings and previous year’s dividend are the only two universal and significant explanatory variables for dividend, and thus they support Lintner’s model. Depreciation and the two period change in sales have assumed the correctly signed and significant coefficients only in a few cases. The average value of the earnings’ multiplier is found to be 0.31 and that of the lagged dividend 0.38, the latter implying an adjustment coefficient of 0.62.