Do We Need a Regulation on Dividends for Indonesia Stock Exchange?

Keywords: Dividend life-cycle, Dividend policy, propensity to pay dividends, earned/contributed capital, Indonesia Stock Exchange

Abstract

This study examines the dividend life-cycle hypothesis and the propensity of non-financial firms listed on the Indonesia Stock Exchange (IDX) to pay dividends, in light of a recent idea by the IDX to regulate dividend payments. Using several proxies of the life cycle, the results consistently show that Indonesian listed firms follow the dividend life-cycle hypothesis. Our results recommend that if the authority insists on regulating dividend payments, the regulation should take into account the firms’ life cycles. Firms should only be required to pay dividends when they reach a certain stage and/or meet defined characteristics, according to their stage or characteristics.

Author Biographies

Leo Indra Wardhana, Universitas Gadjah Mada

Socpus ID: 57193538982. Department of Economics and Business Vocational College, Universitas Gadjah Mada, Indonesia

He is a lecturer and researcher in the Department of Economics and Business Vocational College Universitas Gadjah Mada, Indonesia. He earned his Ph.D. in Banking and Finance, in 2016 from Laboratoire d’Analyse et de Prospective Economiques (LAPE), Université de Limoges, France. He has published articles in reputable international peer reviewed journals such as Applied Economics and International Review of Financial Analysis.

Eduardus Tandelilin, Universitas Gadjah Mada

Professor of Finance at Universitas Gadjah Mada

References

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Published
2018-04-27
How to Cite
Wardhana, L. I., & Tandelilin, E. (2018). Do We Need a Regulation on Dividends for Indonesia Stock Exchange?. Gadjah Mada International Journal of Business, 20(1), 33-58. Retrieved from https://dev.journal.ugm.ac.id/v3/gamaijb/article/view/15604