A study on risk and return of Malaysian firms : how do they affect dividends?

• Main Author: Kelly, Anak Usit
• Format: Final Year Project Report
• Language: English
• Published: Faculty of Economics and Business. 2012
• Subjects: HB Economic Theory; HJ Public Finance
• Online Access: http://ir.unimas.my/id/eprint/4603/11/Kelly%20Anak%20Usit%20%28fulltext%29.pdf; http://ir.unimas.my/id/eprint/4603/
• Institution: Universiti Malaysia Sarawak

This study focuses on determining how risk and return of Malaysian public listed firms affect the dividend payments. Specifically, this study is aimed to investigate the actual relationship between risk and return as well as profitability and firm size of Malaysian firm and dividends. The sample data were collected from a total of 248 companies which listed in Bursa Malaysia. On the other hand, the test of study is conducted from a period January 2006 to December 2010 and used average stock returns, beta coefficient of each firma as a proxy of risk, profitability and firm size. Six hypothesized relationship were tested. Descriptive statistics, correlation matrix and panel regression tests were utilized to test the hypotheses. The results obtained were appealing as risk and stock return in Malaysia in line with CAPM Theory. The risk and returns as well as firm size of the firms have a negative relationship with dividend payment contradicts with the results between profitability and dividends where exists a positive relationship. This study may be practical for directors and managers to comprehend the scope of dividend payments based on firm’s characteristics towards a better dividend policy. This study enhances the knowledge and understanding in this area to both academicians and practitioners.