Searching for Determinants of Pay or Not to Pay Cash Dividend in Indonesia

Abstract

Normal 0 false false false EN-US X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} A dividend decision of a firm is an outcome of various considerations. These considerations differ across time and industry. Based on asymetric information – agency theory th ougtht , this study re-examined various variables that have a bearing on the dividend decision of a firm. In addition to examining the impact of corporate fundamentals on   dividend policy , the study also analyzed the effect of expropriation trigger variables ( family ownership, cash funds , the level of diversification and Related Party Transaction/RPT ) on a dividend policy . The results of panel logistic regression indicated that C ash F unds, RPT, P rofitability, Size, Growth, Debt and Macroecomics variables are the determinants of the dividend policy for Indonesian listed public companies, observed during 2002 to 2010.   Keywords : dividend policy -pay and not pay cash dividend, expropriation, asymmetry information, agency theory,   family ownership, cash funds, level of diversification, related party transaction, panel data analysis.