Financial Deceitful Trick through Dividend Smoothing

Abstract

Deceit sleeps with greed. So looking at the dividend alone, very rarely would it show fraud indicators. Existing models like Beneish model, Ratio Analysis or Altman Z-Score do not investigate the dividend trend per se but Lintner (1956) suggests that the actual and target payout ratio normally deviate from each other. With this in mind, the intention of the study was to investigate whether Malaysian firms paying dividend were involved in dividend smoothing activity. Findings from the regression analysis found supports for the established null hypothesis. One can therefore conclude that these Malaysian firms were involved in dividend smoothing activities.