The effects of government and state ownership on dividends

This study aims to investigate the relationship between government ownership and
dividend policy of Malaysian listed companies. Specifically, the objective of the study is to
examine whether government and state ownerships influence dividend payout and dividend per
share. The study used a sample of 400 companies, which were randomly chosen. Two
dependent variables were used as a proxy for dividend namely the dividend per share (DPS) and
dividend payout ratio (DPR), while 8 government agencies (EPF, LTH, KWAP, LTAT, MKD,
KNB, PNB and STATE) represented government ownership. Since dividends are truncated, the
Tobit model was utilized to examine the effect of government ownership. The findings
showed that there is no relationship between government ownership and dividends when using
the DPS as the dependent variable. However, when DPR is used, the result showed that
government ownership could affect the dividend policy. Furthermore, it is found that
privately funded government agencies were more likely to affect dividends. This result
indicates that these government agencies influence the proportion of earnings distribution or the
payable amount rather than the amount of dividend per unit of shares.