Antecedent Variables of Dividend Policy in Public Manufacturing Companies:Case in Indonesia

Abstract

The purpose of this study was to determine the antecedent variables of dividend policy. The independent variables are earnings management, managerial ownership, and free cash flow. The sample was taken by using a purposive sampling technique consisted of 302 firm years. Data collected from the Indonesia Stock Exchange with the research period from 2015 - 2018. The results of this study showed that earnings management and managerial ownership do not influence the dividend payout ratio. Free cash flow has a significant influence on the dividend payout ratio. Managers do not use free cash flow as a policy that tends to decrease shareholders' wealth. Management uses free cash flow as a policy to minimize agency costs.