The role of earnings and tax on dividend policy of Indonesian listed firms
Journal Title: Jurnal Keuangan dan Perbankan - Year 2019, Vol 23, Issue 1
Abstract
Prior studies show that profitability is the main financial aspect that determines a firm’s dividend policy. To add to the Indonesian’ dividends literature, this study examines the role of earnings and tax as dividend policy in Indonesian listed firms. This study argues that besides profitability, Indonesian firms consider other financial performance, namely earnings (contributed capital and prior year earnings) and tax to determine their dividend policy, since earnings reflect firm’s real ability to pay dividends, and tax affects the number of dividends should be paid. Using 1688 firm-year observations of Indonesian firms from 2012 to 2016, the panel data regression result shows that prior year’s earnings and contributed capital, are the significant determinants of firms sample’s dividend policy. However, the insignificant result is found in the corporate tax role. Meanwhile, the robustness test, earnings, and tax are significant and of the expected sign. The result implies that the higher the firms’ earnings, the higher the dividend payout ratio that is used as a proxy to the firms’ dividend policy. Corporate tax, on the other hand, is a significant negative determinant in some years of the observation. Higher corporate tax hinders managers to increase the dividend payout ratio.
Authors and Affiliations
Yanthi Hutagaol-Martowidjojo, Hansi Joachim, Dellia Anggreni
Keywords
Related Articles
- EP ID EP661701
- DOI 10.26905/jkdp.v23i1.2581
- Views 88
- Downloads 0
SEMAKIN BERAGAM SEMAKIN BAIK? ISU KEBERAGAMAN GENDER, KEUANGAN, DAN INVESTASI PERUSAHAAN
This research aimed at investigating the impact of gender diversity on financial performance and investment efficiency in public companies listed in Indonesia Stock Exchange. As there was an increase in the number of wom...
The Global Economic Crisis and Its Impact on Bank Lending in Indonesia
This study examined the impact of the crisis on bank lending in Indonesia. The crisis was also interacted with profitability and liquidity to see the impact of profitability and liquidity during the global economic crisi...
LOYALITAS NASABAH DAN KINERJA PERBANKAN DI INDONESIA
The purpose of this study was to investigate the impact of customer loyalty on firm performance in the banking industry in Indonesia. This study used a sample of banking firms listed on the Indonesian Stock Exchange. The...
GCG Role and Audit Quality in Reducing Earnings Management Action in Indonesian Manufacturing Firms
All elements in the financial statements were responsibility of the management, however investors more pay attention on profit information so that this will trigger the management to do earnings management. This study wa...
HOW READY ARE PEOPLE FOR CASHLESS SOCIETY?
Financial technology could be an effective tool to achieve financial inclusion. However, it needed a certain level of readiness of society. In this paper, we investigated the determinants of readiness in the implementati...