Dividend policy: Evidence of Government-Linked Companies (GLCs)

The Malaysian Government-Linked Companies (GLCs) had lagged significantly in terms of total shareholder´s return which was measured by dividend payout. Indeed, GLCs are unique from other entities. Therefore, the main objective of this study attempts to identify the relationship between six characteristics of GLCs and dividend payout ratios that include corporate governance mechanisms. Thirty one GLCs in Malaysia are included for this study and the data are collected from Thomson One Banker database and Annual Reports from 2004 to 2007. The results clearly indicate that profitability, cash flow and board independence affect GLC´s dividend payout ratio. This model reveals approximately 23% of the factors dominantly influence the dividend policy in the Malaysian GLCs and provides remarkable evidence that corporate governance is one of the areas that might be explored in future research in the dividend policy study of GLCs by incorporating other governance elements.