DETERMINANTS OF DIVIDEND PAYOUT POLICY: EVIDENCE FROM LQ 45 COMPANIES

Hedianti Deliana, Ahmad Danu Prasetyo

Abstract


Dividend payout policy determines the decision of the dividend distribution to the shareholders is an important issue for both the investor and the firm. Income investors tend to buy shares of companies who regularly distribute dividend. On 2018, LQ 45 index as one of the most attractive indexes in Indonesia recorded that 75.5% of LQ 45 companies distributed dividend. Therefore, in order to provide useful investment consideration for income investor, this research will identify the determinants of dividend payout policy in LQ 45 companies. This research employed Dividend Payout Policy measured by Dividend per Share as the dependent variable. The independent variables consist of Leverage measured by Debt to Asset Ratio, Liquidity measured by Current Ratio, Profitability measured by Return on Equity, and Firm Size measured by Total Asset. The sample of this research is taken using purposive sampling. It consists of 19 companies listed in LQ 45 index February - July 2019 period with time horizon from 2009 to 2018. Panel data regression is applied to analyze the data. Estimation model test is held which resulted in Fixed-Effect Model. Cassical assumption test is held before running the regression. The data analysis is done by using Stata 14.2. T-test and F-test with confidence interval of 95% are conducted to test the hypothesis. T-test result shows the significant positive relationship between profitability and firm size towards dividend payout policy. This implies that LQ-45 firms with higher profitability and larger firm size tend to distribute more dividend. F-test result implies that all independent variables simultaneously affect dividend payout policy. The adjusted R2 value of the model is 0.8569 which indicates that 85.69% of the variability in the dependent variable can be explained by the independent variables while the remaining 14.31% is explained by other variables which are not included in this research.

 

Keywords: 1 Dividend Payout Policy · 2 Leverage · 3 Liquidity · 4 Profitability · 5 Firm Size


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