Dividend policy of the Jakarta Stock Exchange listed manufacturing company and the underlying factors

Farah Chintya Benyadi, Andrianantenaina Hajanirina, Mila Austria Reyes

Abstract


The purpose of this study is to analyze whether profitability, liquidity, leverage and firm size affect dividend policy. Dividend provides riskless revenue for shareholders and though according to the theory, dividend, is irrelevant to firm value. Dividend policy is measured by dummy variable, and the underlying factors including profitability which using return on asset to be measured, liquidity that using current ratio, leverage which using total debt to total asset ratio while log natural of total asset is used as measurement of the firm size. Data collection is using purposive sampling with total sample of 61 companies from manufacturing sector companies listed on Indonesia Stock. This study is using binary logistic regression with 299 sample size. The outcome of this study present that dividend policy is significantly associated with profitability and firm size yet have no significantly correlated with liquidity and leverage of the company.


Keywords


dividend policy; profitability; liquidity; leverage; firm size

Full Text:

PDF

References


Ahmad, G. N., & Wardani, V. K. (2014). The effect of fundamental factor to dividend policy: Evidence in Indonesia Stock Exchange. International Journal of Business and Commerce, 4(2), 14-25.

Aivazian, V., Booth, L., & Cleary, S. (2003). Do emerging market firms follow different dividend policies from U.S. firms? Journal of Financial Research, 26(3), 371-387.

Alli, K. L., Khan, A. Q., & Ramirez, G. G. (1993). Determinants of corporate dividend policy: A factorial analysis. The Financial Review, 28(4), 523-547.

Boujelbene, Y., & Besbes, L. (2012). The Determinants of information asymmetry between managers and investors: A study on panel data. IBIMA Business Review, 2012(2012), 1-11.

Brook, Y., Charlton, W. T., & Hendershott , R. J. (1998). Do firms use dividends to signal large future cash flow increases? Financial Management, 27(3), 46-57.

Dadbeh, F., & Mogharebi, N. (2013). A study on effect of information asymmetry on earning management: Evidence from Tehran Stock Exchange. Management Science Letters, 3(7), 2161-2166.

DeAngelo, H., DeAngelo, L., & Stulz, R. M. (2006). Dividend policy and the earned or contributed capital mix: A test of the life-cycle theory. Journal of Financial Economics, 81(2), 227-254.

Deshmukh, S. (2005). The effect of asymmetric information on dividend policy. Quarterly Journal of Business and Economics, 44(1/2), 107-127.

Durrah, O., Rahman, A. A., Jamil, S. A., & Ghafeer, N. A. (2016). Exploring the relationship between liquidity ratios and indicators of financial performance : An analysis study on food industrial companies listed in Amman Bursa. International Journal of Economic and Financial Issues, 6(2), 435-441.

Easterbrook, F. H. (1984). Two agency-cost explanations of dividends. American Economic Review, 74(4), 650-659.

Fama, E. F., & French, K. R. (2001). Disappearing dividends: Changing firm characteristic or lower propensity to pay? Journal of Financial Economics, 60(1), 3-43.

Griffin, P. A. (1976). Competitive information in the stock market: An empirical study of earnings, dividens and analyst' forecasts. Journal of Finance, 31(2), 631-650.

Gupta, V. (2017). Factors Determining the dividend policy of a company. Abhigyan, 35(3), 21-30.

Ho, H. (2003). Dividend policies in Australia and Japan. International Advances in Economic Research, 9(2), 91-100.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305-360.

Kannadhasan, M., Aramvalarthan, S., Balasubramanian, P., & Gopika, A. (2017). Determinants of dividend policy of Indian manufacturing companies: Panel autoregressive distributed log analysis. Academy of Accounting and Financial Studies Journal, 21(2), 1-12.

Kaźmierska-Jóźwiak, B. (2015). Determinants of dividend policy: Evidence from Polish listed company. Procedia Economics and Finance, 23(1), 473-477.

Khang, K., & King, T.-h. D. (2006). Does dividend policy relate to cross-sectional variation in information asymmetry? Evidence from return to insider trades. Financial Management, 35(4), 71-94.

Kumar, D., & Chandrasekar, V. (2014). Financial management analysis of dividend policy pursued by selected Indian manufacturing company. Journal of Financial Management and Analysis, 27(1), 20-32.

La Porta, R., Lopez‐de‐Silanes, F., Shleifer, A., & Vishny, R. W. (1998). Law and finance. Journal of Political Economy, 106(6), 1113-1155.

Li, K., & Zhao, X. (2008). Asymmetric information and dividend policy. Financial Management, 37(4), 673-694.

Lin, T.-J., Chen, Y.-P., & Tsai, H.-F. (2017). The relationship among information asymmetry, dividend policy and ownership structure. Finance Research Letters, 20(1), 1-12.

Lintner, J. (1956). Distribution of income of corporations among dividend, retained earning, and taxes. American Economic Review,46(2), 97-113.

Masdupi, E. (2005). Analisis dampak struktur kepemilikan pada kebijakan hutang dalam mengontrol konflik keagenan. Jurnal Ekonomi dan Bisnis Indonesia 2005, XX(I).

Mehta, A. (2012). An empirical analysis of determinants of dividend policy - Evidence from the UAE Companies. Global Review of Accounting and Finance, 3(1), 18-31.

Miller, M. H., & Rock, K. (1985). Dividend policy under asymmetric information. The Journal of Finance, 4(4), 1031-1051.

Modigliani, F., & Miller, M. H. (1961). Dividend policy, growth, and the valuation of shares. Journal of Business, 34(4), 411-433.

Muda, I. (2017). Role of dividend of power to buy shares in companies in Indonesia Stock Exchange. Academic Journal of Economic Studies, 3(2), 41-47.

Myers, M., & Bacon, F. (2004). The determinants of corporate dividend policy. Academy of Accounting and Financial Studies Journal, 8(3), 17-28.

Nurchaqiqi, R., & Suryani, T. (2018). The effect of leverage and liquidity on cash dividend policy with profitability as moderator moderating . Accounting Analysis Journal, 7(1), 10-16.

Nurmala. (2009). Effect of dividend policy on stock price automotive enterprises in the Jakarta Stock Exchange. Independent Vol. 9 No. 1, 34-47.

Pinem, D., & Dwi , B. (2016). The analysis of company performance and sales growth to the dividend policy at the company go public in Indonesia Stock Exchange. International Journal of Business and Commerce, 5(6), 105-116.

Rosadi, D. (2011). Analisis ekonometrika dan runtun waktu terapan dengan R. Yogyakarta: Andi Offset.

Roy, A. (2015). Dividend policy, ownership structure and corporate governance: An empirical analysis of Indian firms. Indian Journal of Corporate Governance, 8(1), 1-33.

Rozeff, M. S. (1982). Growth, beta and agency costs as determinants of dividend payout ratio. The Journal of Financial Research, 5(3), 249-259.

Sartono, A. (2008). Manajemen keuangan teori dan aplikasi edisi empat. Yogyakarta: BPFE.

Sugiyarso, G., & Winarni, F. (2005). Manajemen keuangan. Yogyakarta: Media Pressindo.

Sugiyono. (2009). Metode penelitian kuantitatif, kualitatif dan R&D. Bandung: Alfabeta.

Syamsudin, L. (2011). Manajemen keuangan perusahaan. Jakarta: Raja Grafindo Persada.

Trang, N. X. (2012). Determinants of dividend policy: The case of Vietnam. International Journal of Business, Economics and Law, 1(1), 1-18.




DOI: http://dx.doi.org/10.33021/jaaf.v6i1.3615

Refbacks

  • There are currently no refbacks.


Mailing Address

Jl. Ki Hajar Dewantara, Kota Jababeka, Cikarang Baru, Bekasi 17550 - Indonesia

Mail Address

jaaf@president.ac.id

 

ISSN 2580-1791 (Print)

ISSN 2615-8051 (Online)

View My Stats

flag

 

---------------------------------------------------------------------------------------------------------------------------------------------------

JAAF (Journal of Applied Accounting and Finance) is indexed in:

Current accreditation SINTA 4