Single tier tax system, dividend payouts and family firms

Evidence from Malaysia

Research output: Contribution to journalArticle

Abstract

This study has two objectives. First, it compares the dividend payouts of family firms and non-family firms for two specific periods, before and after the implementation of a single tier tax system (STT) in Malaysia. Second, it examines the relationship between family firms and dividend payouts. Using 483 firm-year observations, this study suggests that family firms pay lower dividends than non-family firms during both periods. In addition, the mean value of dividends paid by family firms decreased after the implementation of STT. It is also evident that a negative relationship exists between family firms and dividend payouts; family firms are less likely to pay dividends that non-family firms. A few unique characteristics of family firms, such as long-term investment orientations, smaller company size and greater dependence on leverage, may result in family firms retaining their cash rather than declaring dividends.

Original languageEnglish
Pages (from-to)461-474
Number of pages14
JournalInternational Journal of Business and Management Science
Volume8
Issue number2
Publication statusPublished - 1 Jan 2018

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Tax system
Dividends
Family firms
Malaysia
Small companies
Company size
Leverage
Low pay
Cash

Keywords

  • Dividend payouts
  • Dividend tax reform
  • Family firms
  • Single tier tax system

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics

Cite this

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