Norazlan Alias

Board Structure, Capital Structure and Dividend Per Share: Is there Interaction Effect?

This study examines the direct effects of firm�s characteristics such as board structure and capital structure on divided per share as a proxy of firm�s performance and interaction between board structure and capital structure on dividend. The fixed effect regression uses a sample of 361 non-financial Malaysian listed firms over the period of 2002 to 2007. The decision made by the board of directors with duality role of Chairman cum Chief Executive Officer and larger board size to pay dividend demonstrates that duality role of chairman cum chief executive officer have negative effect on dividend payment but not outside independent director(s). The interaction between board structure namely duality, independent directors, board size and capital structure namely debt ratio reveals that duality weakens the negative effect of debt ratio on dividend while independent directors strengthens the negative effect of debt ratio on dividend payment. Overall, the results of this study may be summarized to suggest that distributable income to shareholders increases through a balanced financing decision between capital structure choice and dividend payment made by the board of directors that possessed duality role.

Asset divestitures and corporate operational returns: an agency theory perspective on Malaysian public-listed companies

Divestitures of property, plant and equipment (PPE) assets are a common form of corporate restructuring. However, divesting companies do not necessarily attain improved post-divestiture shareholder wealth. Studies show company characteristics and use of divestiture proceeds may influence divestiture outcomes. This paper attempts to determine these divesting company characteristics and use of proceeds associated with improved shareholder wealth based on the Agency Theory. A sample of Malaysian public-listed companies that divested assets within 2002--2005 is used. Logistic regression segregates these companies based on their industry-adjusted operational returns. Companies that improve post-divestiture operational performance require urgent pay out motives to divest. Companies with deteriorated post-divestiture performance divest without urgent pay out motive and tend to retain proceeds. This suggests agency problem of managerial discretion in asset divestitures. In asset selection, divestitures of larger and more inefficient assets were found associated with improved company performance. Malaysian companies prefer divesting assets related to their core businesses indicating a diversified company structure is more beneficial than a focused structure in developing countries.