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

Leo Indra Wardhana; Eduardus Tandelilin

doi:10.22146/gamaijb.25055

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

Leo Indra Wardhana, Eduardus Tandelilin

(Submitted 18 May 2017)

(Published 27 April 2018)

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.

Keywords

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

Full Text: PDF

DOI: 10.22146/gamaijb.25055

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