An Analysis Of Factors Influencing The Dividend Policy Of Indonesia Stock Exchange Listed Companies

Doni, Doni (2015) An Analysis Of Factors Influencing The Dividend Policy Of Indonesia Stock Exchange Listed Companies. Undergraduate thesis, Universitas Internasional Batam.

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Abstract

The inspiration for undertaking this study began with the extensive global research on determining factors of firm’s dividend policy. It is intriguing to do an in-depth research on dividend policy because of its massive effect on a firm’s capital structure resulting from the retain earnings. One of the most debatable issues in the corporate finance literature is also the behavior of dividend policy which is still amongst the prominent aspects both in developed and emerging markets. Furthermore, it is also one of the fascinating topics in financial research which is given significant attention in solving the dividend puzzle resulting in a large number of conflicting hypothesis. The decision to pay dividends is influenced by many financial factors. The purpose of this study is to analyze the factors that affect dividend policy of listed companies in Indonesia Stock Exchange (IDX). The analysis is based on multiple regression models covering the period from 2009 to 2013 and a sample of 167 non-financial firms from 497 firms for 5 years were selected. However, nearly 40% of non-financial firms observation were found to be zero in dividends. Therefore, only 102 companies were used for further discussion. The results indicated that higher risks, higher growth opportunities, more institutional ownership, large and mature firms have higher tendencies to pay dividends. These results also revealed that profitability, leverage and asset structure are not statistically important determinants of dividend decision in Indonesia Stock Exchange.

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