Dividend Policy of Indonesian Listed Firms: The Role of Families and the State

54 Pages Posted: 9 Aug 2018

See all articles by Meryem Duygun

Meryem Duygun

Nottingham University Business School

Yilmaz Guney

University of Hull

Abdul Moin

Universitas Islam Indonesia, Faculty of Economics, Students

Date Written: 23 07, 2018

Abstract

We investigate factors influencing the dividend policy of the listed Indonesian firms by focusing on agency costs and ownership structure. Our study finds that firms with higher conflicts of interest among managers and shareholders pay lower dividends. In the context of the conflicts of interest among major and minor shareholders, we find that such conflicts would exert little impact on dividend payments. Further, we find that the family-controlled firms prefer to pay less dividends whereas the corporations with higher state ownership are associated with larger dividend payments. Our findings are in line with the argument that the Indonesian state consider corporate dividends as one of the main sources of revenues other than corporate taxes in their government budget. This issue may have adverse effects on the growth of cash-constrained small and medium-sized enterprises.

Keywords: Dividends, Ownership Structure, Agency Conflicts, Indonesia

JEL Classification: G35

Suggested Citation

Duygun, Meryem and Guney, Yilmaz and Moin, Abdul, Dividend Policy of Indonesian Listed Firms: The Role of Families and the State (23 07, 2018). Economic Modelling, 2018. Available at SSRN: https://ssrn.com/abstract=3218592

Meryem Duygun

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

Yilmaz Guney (Contact Author)

University of Hull ( email )

Hull, HU6 7RX
United Kingdom

HOME PAGE: http://https://www.hull.ac.uk/faculties/fblp/hubs.aspx

Abdul Moin

Universitas Islam Indonesia, Faculty of Economics, Students ( email )

Jl. Pawiro Kuat
Condong Catur, Depok
Sleman, Daerah Istimewa Yogyakarta 55283
Indonesia

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