Dividend Policy of the Plantation Sector: Evidence from Shariah and Non-Shariah Compliant Firms in Malaysia

A firm's dividend policy conveys essential information about its decisions on profit distribution, making it highly relevant for shareholders and investors while potentially influencing the firm's overall value. In this study, dividend payment is used as a proxy to assess whether firms distribute high or low dividends, offering insights into their dividend policies. The study has three key objectives: (i) to examine the factors influencing dividend payments in Malaysia’s plantation sector, (ii) to determine significant differences in dividend payments between Shariah-compliant and non-Shariah-compliant firms, and (iii) to analyze differences in dividend payments during crisis and non-crisis periods. The study considers several determinants of dividend policy, including dividend payout ratio, firm size, liquidity, leverage, sales growth, profitability, and two dummy variables—Shariah status and crisis period. Adopting a quantitative approach, the research investigates 40 plantation firms listed on Bursa Malaysia from 2000 to 2022. A Fixed Effects Model with clustered standard error estimation is employed to address heteroscedasticity and serial correlation issues. The findings indicate a significant positive relationship between dividend payments and both firm size and profitability, whereas leverage and the crisis period exhibit a significant negative relationship with dividend payments. This study contributes to the existing body of knowledge by providing valuable insights for management, stakeholders, and policymakers within Malaysia’s plantation sector.

Dividend Payout Ratio, Dividend Policy, Plantation Sector

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