Abstract
This study aims to examine the effects of maturity and agency cost model variables on the behavior of dividend initiation policy, and the effect itself on dividend sustainable. Samples of 93 non-financial companies that have Initial Public Offering (IPO) on the Indonesia Stock Exchange (IDX), 2005 - 2017. This study uses Structural Equation Modeling with SmartPLS software to test the hypothesis. The test results show: maturity and capital structure variable have significant and positive effects on dividend initiation policy. Ownership structure does not affect the dividend initiation policy. Dividend initiation variable has a significant and positive effect on dividend sustainable.Keywords: Agency Cost Model; Dividend Initiation Policy; Dividend Sustainability.JEL Classification: F12, F30, F39DOI: https://doi.org/10.32479/ijefi.8469
Highlights
Jain et al (2003) state that most companies decide to go public at the beginning of their growth in the fast-growing industrial environment
Evaluation of Measurement Model (Outer Model) Based on the testing of outer model for convergent validity as one of the SmartPLS analysis models, the results show that all indicators used to measure variable latent have met the criteria for outer loading, the value is >0.7, so that is appropriate to use further analysis, except for Debt to Equity indicator from capital structure variable, and size indicator from maturity variable
Managerial Implication This variable for test the significance credibility from agency cost model seen from management behavior towards dividend initiation policies from the aspect of owner structure, capital structure and maturity, the effect on dividend sustainable
Summary
Jain et al (2003) state that most companies decide to go public at the beginning of their growth in the fast-growing industrial environment. The funds available in the company are not sufficient to realize their growth needs. Sharma (2001) argues companies that just have implemented an initial public offering (IPO) are not expected to immediately carry out dividend initiation in the early years after IPO, because of the need for substantial funds for investment in the future. The argument in line with Kale et al (2011) in his research, state that from 6.588 IPO companies there were 599 companies or 9.09% who initiated dividends during first 5 years after IPO period 1979-2005 on NYSE/NASDAQ. From the two facts above, it can be concluded that only insignificant numbers, companies in America initiated dividends in the early years after IPO
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callMore From: International Journal of Economics and Financial Issues
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
