Market based performance: Do ownership structures, or firm policy choice matter?

Abstract

This study examines whether the structure of share ownership or firm's dividend and debt policies provide explanation for firm performances in Malaysia. Firm performance, measured as Tobin's Q is modelled in a dynamic panel framework to estimate effects of director ownership, family ownership, foreign ownership, and firm's dividend and debt policy. The generalised methods of moments (GMM) method is used to estimated the models for 80 CI components companies listed on Main Board of Malaysia observed from 1999 to 2002. The findings reveal strong evidence of positive impact of firm's dividend and debt policy on firm performance. However, ownership structure seems to be less important for market based performance of Malaysian firms. These results are expected to provide guidelines to the investors regarding the significance of firm dividend policy, leverage policy and market to book value ratio as some of the key sources of value creation for Malaysian listed firms.