Relations among Financing Decision, Dividend Policy, and Ownership.

The reason select this article:

To know the impact of financing decision, dividend policy, corporate ownership on firm performance at presence or absence of growth opportunity.

The articles:

1. Interrelationships among capital structure, dividend, and Ownership: Evidence from South Korea.

2. The Impact of Financing Decision, Dividend Policy, corporate ownership on Firm Performance at Presence or absence of growth Opportunity: A Panel Data Approach, Evidence from Kuala Lumpur Stock Exchange.

Components of Comparison	Article from CRP	Article from Student
Title	Interrelationship among Capital Structure, Dividends, and Ownership: Evidence from South Korea	The Impact of Financing Decision, Dividend Policy, corporate ownership on Firm Performance at Presence or absence of growth Opportunity: A Panel Data Approach, Evidence from Kuala Lumpur Stock Exchange
Topic	Relations among Financing Decision, Dividend Policy, and Ownership.	Relations among Financing Decision, Dividend Policy, and Ownership.
Theory used by article	Pecking Order Theory Management prefers internal funds (available liquid asset) to leverage, in part because liquid assets can be spent in a more discretionary and potentially sub-optimal manner.	Modiglinai and Miller Theory The changes in corporate debt policy, dividend policy and corporate structure have no impact whatsoever on firms’ value.
Hypothesis of research	Causality may proceed in either direction between each pair of variables. Many previous studies have found conflicting result, even when controlling for the possibility of simultaneity.	Ho1: firm performance measured Tobin Q will not be affected by changes in firm’s dividend and leverage policy irrespective of whether or not firm face investment opportunities. Ho2: firm value measured by Tobin Q will not be affected by firm corporate structure. H03: firm performance may not be affected by management ownership irrespective of whether or not firm face investment opportunities.
Variables used in research	Firms leverage (LEV) As the ratio of total debt to book value of total assets. Dividends (DIV) As the ratio of cash dividends to operating income. Firm’s ownership (OWN) Is measured by percentage of stock owned by insiders. Firm’s cash flow (CF) Is calculated as the ratio of net income plus plus depreciation to total assets. Firm liquidity (CR) Is measured as the ratio of current assets to current liabilities. Profitability (PRO) As the ratio of net income to net sales. Firm’s size (SIZE) Is characterized by natural log of market value of equity.	DIVT is the total dividend for the year to average total asset. DTA is the debt to asset ratio represents the leverage and capital structure of the firm DOWN is the percentage of director ownership in the firm MULTI is the dummy variable taking value of one if the firm is widely held by multinational firm or zero for otherwise. DOM is the dummy variable taking value of one if ownership dominated domestic ownership firm. FAM is the used to proxy family domination. It takes value of one if both chairman and directors are concentrated within the family.
Method of analysis	3 Stages Least Square (3SLS) Methodology The ordinary least square (OLS) method as the letter leads to biased and inconsistent parameter estimates when a system has interdependent endogenous variable.	Regression Model to examine the impact of a firm’s dividend and debt policy and corporate structure on firm value at the absence or presence of investment opportunities.
Result of the analysis	Table 1. The debt equation result Comparing the OLS coefficient estimates with those generated via 3SLS, we see some striking differences in sign, magnitude, and significance particularly with regard to the ownership, dividend, and profitability variable. Table 2. The dividend equation results The Own and LEV coefficient estimates are both significantly positive, implying that not only are debt and dividend policy complementary, but also the higher ownership level leads to higher dividend, possibly to prevent entrenched managers from acting in a manner inconsistent with stockholder. Table 3. The ownership equation results The CF and CR variables have negative and significant coefficient estimates implying that liquidity is not significant determinant of managerial ownership. The coefficient for SIZE is not significant. And there is only ane (non-intercept) coefficient estimates (CF) hat is  statically significant across both estimation procedures; and for the variables, the sign of the coefficient estimates changes from OLS to 3SLS. Conclusion : The higher levels of ownership and dividends negatively affect leverage. Ownership and leverage both positively impact dividend. Lastly, leverage negatively associated with ownership, while dividend positively impact ownership.	Table 1. Both growth and non-growth firms are distinctly different from one another in a number of dimensions. Table 2. Firm ownership concentrated by domestic and multinational participation also provides strong support for better firms’ performance. Table 3. Debt policy and dividend policy provide strong support for a superior performance. Conclusion A group of Firms which face growth opportunities, dividend policy and debt policy are important factors that explain firm performance. In the absence of growth opportunities it can be observed a positive association between firm performance and dividend payment, while negative association between firm performance and leverage ratio. While managerial ownership provides as control mechanism for agency problem provide no explanation whatsoever for firm performance whether or not the firm faces growth.