Dividends, Leverage, and Family Ownership in the Emerging Indonesian Market

14 Pages Posted: 23 Apr 2016

See all articles by Evy Mulyani

Evy Mulyani

School of Accounting, Economics and Finance Deakin University

Harminder Singh

Deakin University - School of Accounting, Economics and Finance

Sagarika Mishra

Deakin University

Date Written: March 25, 2016

Abstract

We examine the roles of dividends and leverage to mitigate agency problems within family firms in Indonesia. Using simultaneous equations, we find a significant negative association between family ownership and dividend payout and a two-way negative relation between dividend payout and leverage. Our analysis reveals that, compared to non-family firms, family firms tend to maintain a lower dividend pay-out and higher leverage. The presence of large non-family ownership appears to have an impact on determining levels of private benefit control. During the Asian and global financial crisis, family firms changed their dividend pay-out more than non-family firms did.

Keywords: dividend, leverage, family ownership

JEL Classification: G35, G32

Suggested Citation

Mulyani, Evy and Singh, Harminder and Mishra, Sagarika, Dividends, Leverage, and Family Ownership in the Emerging Indonesian Market (March 25, 2016). Journal of International Financial Markets, Institutions and Money, 2016 Forthcoming, Available at SSRN: https://ssrn.com/abstract=2768448

Evy Mulyani

School of Accounting, Economics and Finance Deakin University ( email )

Burwood, Victoria 3215
Australia

Harminder Singh (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia

Sagarika Mishra

Deakin University ( email )

221 Burwood Highway
Burwood, Victoria 3215
Australia

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