Future earnings growth and dividend payout: Evidence from Malaysia
This study investigates the effect of dividend payout on firms’ future earnings growth (FEG) in Malaysia. We use panel data analysis methodology to determine the effect of dividend payout and other control variables on FEG in 1, 2, 3, 4, and 5 years. Our results show that firm size and payout ratio...
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| Format: | Article |
| Language: | English |
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2019
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| Online Access: | https://repo.uum.edu.my/id/eprint/27454/1/MSL%209%202019%20347%20356.pdf |
| _version_ | 1825805650746146816 |
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| author | Taufil Mohd, Kamarun Nisham Zaharudin, Khairul Zharif |
| author_facet | Taufil Mohd, Kamarun Nisham Zaharudin, Khairul Zharif |
| author_sort | Taufil Mohd, Kamarun Nisham |
| collection | UUM |
| description | This study investigates the effect of dividend payout on firms’ future earnings growth (FEG) in Malaysia. We use panel data analysis methodology to determine the effect of dividend payout and other control variables on FEG in 1, 2, 3, 4, and 5 years. Our results show that firm size and payout ratio had significant positive relationship on four out of five dynamic models tested. The remaining factors except of debt ratio are significant at least four out of the five years used in dynamic models in this study. We find evidence that Malaysian firms show mean reversion pattern in their earnings; smaller firms would enjoy greater future earnings growth; increased monitoring from creditors leads to better earnings performance; firms with better investment prospect have greater future growth in earnings; and higher investment in assets leads to higher future earnings growth. The findings show that in Malaysia, managers use dividend as a tool to signal their positive private information about the firms’ future prospect. |
| first_indexed | 2024-07-04T06:35:44Z |
| format | Article |
| id | uum-27454 |
| institution | Universiti Utara Malaysia |
| language | English |
| last_indexed | 2024-07-04T06:35:44Z |
| publishDate | 2019 |
| record_format | eprints |
| spelling | uum-274542020-09-09T03:19:31Z https://repo.uum.edu.my/id/eprint/27454/ Future earnings growth and dividend payout: Evidence from Malaysia Taufil Mohd, Kamarun Nisham Zaharudin, Khairul Zharif HC Economic History and Conditions This study investigates the effect of dividend payout on firms’ future earnings growth (FEG) in Malaysia. We use panel data analysis methodology to determine the effect of dividend payout and other control variables on FEG in 1, 2, 3, 4, and 5 years. Our results show that firm size and payout ratio had significant positive relationship on four out of five dynamic models tested. The remaining factors except of debt ratio are significant at least four out of the five years used in dynamic models in this study. We find evidence that Malaysian firms show mean reversion pattern in their earnings; smaller firms would enjoy greater future earnings growth; increased monitoring from creditors leads to better earnings performance; firms with better investment prospect have greater future growth in earnings; and higher investment in assets leads to higher future earnings growth. The findings show that in Malaysia, managers use dividend as a tool to signal their positive private information about the firms’ future prospect. 2019 Article PeerReviewed application/pdf en https://repo.uum.edu.my/id/eprint/27454/1/MSL%209%202019%20347%20356.pdf Taufil Mohd, Kamarun Nisham and Zaharudin, Khairul Zharif (2019) Future earnings growth and dividend payout: Evidence from Malaysia. Management Science Letters, 9. pp. 347-356. ISSN 19239335 http://doi.org/10.5267/j.msl.2018.11.006 doi:10.5267/j.msl.2018.11.006 doi:10.5267/j.msl.2018.11.006 |
| spellingShingle | HC Economic History and Conditions Taufil Mohd, Kamarun Nisham Zaharudin, Khairul Zharif Future earnings growth and dividend payout: Evidence from Malaysia |
| title | Future earnings growth and dividend payout: Evidence from Malaysia |
| title_full | Future earnings growth and dividend payout: Evidence from Malaysia |
| title_fullStr | Future earnings growth and dividend payout: Evidence from Malaysia |
| title_full_unstemmed | Future earnings growth and dividend payout: Evidence from Malaysia |
| title_short | Future earnings growth and dividend payout: Evidence from Malaysia |
| title_sort | future earnings growth and dividend payout evidence from malaysia |
| topic | HC Economic History and Conditions |
| url | https://repo.uum.edu.my/id/eprint/27454/1/MSL%209%202019%20347%20356.pdf |
| work_keys_str_mv | AT taufilmohdkamarunnisham futureearningsgrowthanddividendpayoutevidencefrommalaysia AT zaharudinkhairulzharif futureearningsgrowthanddividendpayoutevidencefrommalaysia |