Analysis of Cash Dividend Policy in Indonesia Stock Exchange

Abstract

Dividend policy has been puzzling for researchers for decades. The level of dividend varies not only across industries, but also across countries. This research analyzes the dividend policy of Indonesian public companies, in particular it examines

the partial effect of cash ratio, debt ratio, company size, profitability, and asset

growth on cash dividend policy in Indonesia Stock Exchange from 2008 to 2015.

A total of 102 companies was used as a sample. The samples are divided into four

groups: (1) a group of companies paying changeable dividends (Change group), (2)

a group of companies paying continuous dividends, but then stop paying dividend

(Omission group), (3) a group of companies that initially do not pay the dividends,

but then continuously paying dividend (Initiation group); and (4) a group of companies paying constant dividends (Constant group). Results of hypotheses testing using multiple regression analysis show that profitability and asset growth affect dividend policy in all company groups. Company size affects dividend policy in the Change, Initiation, and Constant groups. Debt ratio influences dividend policy only in the Change group.