Dividend tax reforms for REIT sector in Malaysia provide a rare opportunity to examine the impact... more Dividend tax reforms for REIT sector in Malaysia provide a rare opportunity to examine the impact of dividend taxation on firm valuation. It is found that dividend tax cut announcements result in positive abnormal returns. There are evidences to suggest that REITs with a higher retail and institutional ownership representing the main beneficiaries of these tax cuts are associated with higher cumulative abnormal returns (CARs). It is also found that dividend payout increased significantly during the quarter immediately after the implementation of the first dividend tax cuts. These findings are consistent with the “old view” of dividend taxation which posits that dividend tax cut could affect firms’ investment and payout policies.
Indonesia had the economic and political crisis in mid-1997 through 1999. This crisis resulted in... more Indonesia had the economic and political crisis in mid-1997 through 1999. This crisis resulted in bank performance down even a loss. The banks are also experiencing financial hardship issues, loan loss and the threat bangkrup. A unique characteristic of Indonesian banking system is the existence of regional development banks (Bank Pembangunan Daerah), which is owned by local governments. This study examines the performance of this type of banks compared to private between regional development banks and federal government banks. Also this study examines the factors influence of bank performance. Measurement bank performance are Return On Assets (ROA) and Return On Equity (ROE). The sample of this study consists of 15 community development banks, 56 private banks, and 3 central government banks from 1997 to 1999. Using panel data methodologies, we find that community development banks and federal government banks perform at least as good as the private banks. Dummy equity, economic gr...
The result of this study reveals an evidence of long run underperformance of equity private place... more The result of this study reveals an evidence of long run underperformance of equity private placements in Malaysia using market index as a benchmark. When the firms are matched to firms with similar size and market-to-book, they neither over-perform nor underperform the matching firms over the three-year period under the equal-weighting scheme. However, a considerable difference exists between the CARs and BHARs under the value-weighting scheme. Unlike previous studies that find small firms underperform more than large firms, results of this study show the opposite. We find that large firms show greater degree of underperformance than small firms. The result definitely does not conform to the widely acceptable idea that smaller firms are more likely to issue equity when they are overvalued due to higher degree of information asymmetry. Further results indicate that the underperformance is driven by the outlier in the sample. When it is excluded from the sample, no significant result is detected for the two-year period. Nevertheless, it is interesting to note that for both CAR and BHAR, the underperformance under equal-weighted scheme is worse when the returns are benchmarked against market index but in sharp contrast, the underperformance under value-weighted scheme is worse when the returns are benchmarked against matching firms. ABSTRAK Keputusan kajian menunjukkan prestasi jangka panjang syarikat-syarikat Malaysia yang menerbitkan tawaran persendirian ekuiti adalah lebih rendah berbanding dengan indeks pasaran. Tiada sebarang keputusan signifikan dicatatkan apabila syarikat-syarikat padanan saiz and nisbah nilai pasaran kepada nilai buku digunakan untuk jangka masa tiga tahun bagi skim berwajaran sama. Walau bagaimanapun, wujud perbezaan antara pulangan abnormal kumulatif (CAR) dan pulangan abnormal belian-pegangan (BHAR) bagi skim berwajaran nilai. Keputusan kajian ini menunjukkan keputusan yang bercanggah dengan kajian-kajian terdahulu di mana prestasi syarikat-syarikat kecil adalah lebih teruk berbanding dengan syarikat-syarikat besar. Keputusan ini adalah tidak selari dengan pendapat bahawa syarikat-syarikat kecil lebih cenderung menerbitkan ekuiti terlebih nilai (overvalued) disebabkan oleh maklumat tidak seimbang (information asymmetry) yang lebih tinggi. Keputusan kajian ini juga dipengaruhi oleh data ekstrem (outlier), yang mana apabila data ini dikeluarkan, tiada keputusan signifikan yang direkodkan. Sesuatu yang menarik adalah untuk skim berwajaran sama, pulangan yang rendah dicatatkan bagi indeks pasaran tetapi bagi skim berwajaran nilai, pulangan yang rendah dicatatkan bagi syarikat-syarikat padanan.
There is an increasing trend of firms undertaking share repurchases in Malaysia, yet limited stud... more There is an increasing trend of firms undertaking share repurchases in Malaysia, yet limited studies on repurchase activities have been published. This study attempts to examine managerial mot ives for repurchase in Malaysia using signaling and substitution hypotheses. Unlike firms in western countries, firms in Malaysia are bound by strict ru les and regulations before embarking on repurchases, thus it is argued that motives for share repurchases would be different fro m those of the developed markets. The results of this study are consistent with signaling hypothesis where Malaysian firms repurchase shares partly to signal undervaluation and better operating performance. They also buy back shares whenever there is an increase in cash flo ws. Ho wever, there is no evidence to support that these firms bought back shares to substitute dividend payments as documented by studies from western countries. In fact, repurchases are used to complement dividends. Further evidence shows that managerial ownership has significant influence on firms' repurchase decisions.
The objective of the study is two-fold. First, the study examines the extent of mult iple d irect... more The objective of the study is two-fold. First, the study examines the extent of mult iple d irectorship practices of Malaysian public listed companies. Secondly, the study assesses the relationship of several board characteristics with firm performance. Using a sample of 132 co mpanies in 2008, the result shows that almost 90% of directors of Malaysian public listed firms have between 1 to 3 directorships. The mult iple directorships affect firms' market performance positively but not significantly. Ex-govern ment officials and founders have positive and significant influence on performance. Family ownership is significant and has U-shaped relationship with performance. The findings to some extent have policy implication to corporate governance practices.
Asian Academy of Management Journal of Accounting and Finance
This study focuses on an agency cost explanation of the long-run performance of debt issuers base... more This study focuses on an agency cost explanation of the long-run performance of debt issuers based on debt issuance data in Malaysia during the period from January 2001 to October 2009. Long-run performance is measured by buy and hold abnormal return (BHAR), while growth opportunities (GO), managerial ownership (MO), ownership concentration (OC) and free cash flow (FCF) are adopted as proxies for agency costs. Using a linear regression method, this study finds that BHAR is positively influenced by GO and OC but negatively influenced by MO and FCF, which supports an agency cost explanation of capital structure. An improvement in the performance of debt issuers is found to be associated with the monitoring of debt by debt issuers. Debt issuers with more concentrated ownership and lower MO benefit from the issuance of debt through a reduction of agency costs.
This studyfocuses on the agency costsexplanation of long run performance of debt issuers based on... more This studyfocuses on the agency costsexplanation of long run performance of debt issuers based on debt issuance data in Malaysia during January 2001 to October 2009. Long run performance is measured by buy and hold abnormal return (BHAR) while growth opportunity (GO), ownership concentration (OC) and free cash flow (FCF) are adopted as the proxy for agency costs. Using linear regression method, the study finds that BHAR is positively influenced by GO and OC and negatively influenced by FCF which support the agency cost explanation of capital structure. Increase inthe performance of debt issuersis found to be associated with the monitoring role of debt. Debt issuers with more concentrated ownership are found to be benefitted from the issuancethrough the reduction of agency costs.
By using 70 initial public offerings (IPOs) in the period 1992 to 1998, it is found that company ... more By using 70 initial public offerings (IPOs) in the period 1992 to 1998, it is found that company size, indigenous population ownership and substantial shareholder losses are significant in explaining the variation of IPOs' underpricing. Large companies are associated with providing higher discount on their shares to signal their superior future prospects. The unique characteristic of promoting the indigenous population, Bumiputra, to participate in the Malaysian equity market through the government regulatory intervention has reduced underpricing. However, such intervention might have contributed to the losses on the part of the substantial shareholders. Surprisingly, Leland and Pyle's signalling model on entrepreneur's fractional ownership could not be supported.
Dividend tax reforms for REIT sector in Malaysia provide a rare opportunity to examine the impact... more Dividend tax reforms for REIT sector in Malaysia provide a rare opportunity to examine the impact of dividend taxation on firm valuation. It is found that dividend tax cut announcements result in positive abnormal returns. There are evidences to suggest that REITs with a higher retail and institutional ownership representing the main beneficiaries of these tax cuts are associated with higher cumulative abnormal returns (CARs). It is also found that dividend payout increased significantly during the quarter immediately after the implementation of the first dividend tax cuts. These findings are consistent with the “old view” of dividend taxation which posits that dividend tax cut could affect firms’ investment and payout policies.
Indonesia had the economic and political crisis in mid-1997 through 1999. This crisis resulted in... more Indonesia had the economic and political crisis in mid-1997 through 1999. This crisis resulted in bank performance down even a loss. The banks are also experiencing financial hardship issues, loan loss and the threat bangkrup. A unique characteristic of Indonesian banking system is the existence of regional development banks (Bank Pembangunan Daerah), which is owned by local governments. This study examines the performance of this type of banks compared to private between regional development banks and federal government banks. Also this study examines the factors influence of bank performance. Measurement bank performance are Return On Assets (ROA) and Return On Equity (ROE). The sample of this study consists of 15 community development banks, 56 private banks, and 3 central government banks from 1997 to 1999. Using panel data methodologies, we find that community development banks and federal government banks perform at least as good as the private banks. Dummy equity, economic gr...
The result of this study reveals an evidence of long run underperformance of equity private place... more The result of this study reveals an evidence of long run underperformance of equity private placements in Malaysia using market index as a benchmark. When the firms are matched to firms with similar size and market-to-book, they neither over-perform nor underperform the matching firms over the three-year period under the equal-weighting scheme. However, a considerable difference exists between the CARs and BHARs under the value-weighting scheme. Unlike previous studies that find small firms underperform more than large firms, results of this study show the opposite. We find that large firms show greater degree of underperformance than small firms. The result definitely does not conform to the widely acceptable idea that smaller firms are more likely to issue equity when they are overvalued due to higher degree of information asymmetry. Further results indicate that the underperformance is driven by the outlier in the sample. When it is excluded from the sample, no significant result is detected for the two-year period. Nevertheless, it is interesting to note that for both CAR and BHAR, the underperformance under equal-weighted scheme is worse when the returns are benchmarked against market index but in sharp contrast, the underperformance under value-weighted scheme is worse when the returns are benchmarked against matching firms. ABSTRAK Keputusan kajian menunjukkan prestasi jangka panjang syarikat-syarikat Malaysia yang menerbitkan tawaran persendirian ekuiti adalah lebih rendah berbanding dengan indeks pasaran. Tiada sebarang keputusan signifikan dicatatkan apabila syarikat-syarikat padanan saiz and nisbah nilai pasaran kepada nilai buku digunakan untuk jangka masa tiga tahun bagi skim berwajaran sama. Walau bagaimanapun, wujud perbezaan antara pulangan abnormal kumulatif (CAR) dan pulangan abnormal belian-pegangan (BHAR) bagi skim berwajaran nilai. Keputusan kajian ini menunjukkan keputusan yang bercanggah dengan kajian-kajian terdahulu di mana prestasi syarikat-syarikat kecil adalah lebih teruk berbanding dengan syarikat-syarikat besar. Keputusan ini adalah tidak selari dengan pendapat bahawa syarikat-syarikat kecil lebih cenderung menerbitkan ekuiti terlebih nilai (overvalued) disebabkan oleh maklumat tidak seimbang (information asymmetry) yang lebih tinggi. Keputusan kajian ini juga dipengaruhi oleh data ekstrem (outlier), yang mana apabila data ini dikeluarkan, tiada keputusan signifikan yang direkodkan. Sesuatu yang menarik adalah untuk skim berwajaran sama, pulangan yang rendah dicatatkan bagi indeks pasaran tetapi bagi skim berwajaran nilai, pulangan yang rendah dicatatkan bagi syarikat-syarikat padanan.
There is an increasing trend of firms undertaking share repurchases in Malaysia, yet limited stud... more There is an increasing trend of firms undertaking share repurchases in Malaysia, yet limited studies on repurchase activities have been published. This study attempts to examine managerial mot ives for repurchase in Malaysia using signaling and substitution hypotheses. Unlike firms in western countries, firms in Malaysia are bound by strict ru les and regulations before embarking on repurchases, thus it is argued that motives for share repurchases would be different fro m those of the developed markets. The results of this study are consistent with signaling hypothesis where Malaysian firms repurchase shares partly to signal undervaluation and better operating performance. They also buy back shares whenever there is an increase in cash flo ws. Ho wever, there is no evidence to support that these firms bought back shares to substitute dividend payments as documented by studies from western countries. In fact, repurchases are used to complement dividends. Further evidence shows that managerial ownership has significant influence on firms' repurchase decisions.
The objective of the study is two-fold. First, the study examines the extent of mult iple d irect... more The objective of the study is two-fold. First, the study examines the extent of mult iple d irectorship practices of Malaysian public listed companies. Secondly, the study assesses the relationship of several board characteristics with firm performance. Using a sample of 132 co mpanies in 2008, the result shows that almost 90% of directors of Malaysian public listed firms have between 1 to 3 directorships. The mult iple directorships affect firms' market performance positively but not significantly. Ex-govern ment officials and founders have positive and significant influence on performance. Family ownership is significant and has U-shaped relationship with performance. The findings to some extent have policy implication to corporate governance practices.
Asian Academy of Management Journal of Accounting and Finance
This study focuses on an agency cost explanation of the long-run performance of debt issuers base... more This study focuses on an agency cost explanation of the long-run performance of debt issuers based on debt issuance data in Malaysia during the period from January 2001 to October 2009. Long-run performance is measured by buy and hold abnormal return (BHAR), while growth opportunities (GO), managerial ownership (MO), ownership concentration (OC) and free cash flow (FCF) are adopted as proxies for agency costs. Using a linear regression method, this study finds that BHAR is positively influenced by GO and OC but negatively influenced by MO and FCF, which supports an agency cost explanation of capital structure. An improvement in the performance of debt issuers is found to be associated with the monitoring of debt by debt issuers. Debt issuers with more concentrated ownership and lower MO benefit from the issuance of debt through a reduction of agency costs.
This studyfocuses on the agency costsexplanation of long run performance of debt issuers based on... more This studyfocuses on the agency costsexplanation of long run performance of debt issuers based on debt issuance data in Malaysia during January 2001 to October 2009. Long run performance is measured by buy and hold abnormal return (BHAR) while growth opportunity (GO), ownership concentration (OC) and free cash flow (FCF) are adopted as the proxy for agency costs. Using linear regression method, the study finds that BHAR is positively influenced by GO and OC and negatively influenced by FCF which support the agency cost explanation of capital structure. Increase inthe performance of debt issuersis found to be associated with the monitoring role of debt. Debt issuers with more concentrated ownership are found to be benefitted from the issuancethrough the reduction of agency costs.
By using 70 initial public offerings (IPOs) in the period 1992 to 1998, it is found that company ... more By using 70 initial public offerings (IPOs) in the period 1992 to 1998, it is found that company size, indigenous population ownership and substantial shareholder losses are significant in explaining the variation of IPOs' underpricing. Large companies are associated with providing higher discount on their shares to signal their superior future prospects. The unique characteristic of promoting the indigenous population, Bumiputra, to participate in the Malaysian equity market through the government regulatory intervention has reduced underpricing. However, such intervention might have contributed to the losses on the part of the substantial shareholders. Surprisingly, Leland and Pyle's signalling model on entrepreneur's fractional ownership could not be supported.
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Papers by Kamarun Nisham