Institutional Investors and Firms’ Cash Dividend Payments: Evidence from Non-Financial Firms in Indonesia

Giovanni Christopher, Dony Abdul Chalid

Abstract


ABSTRACT

This paper investigates whether an institutional presence influences the level of a firm’s cash dividend payments. Using data from all non-financial firms listed on the Indonesian Stock Exchange (IDX) during the research period of 2010 to 2015, this research performs regression analysis. The results show that institutional investors can influence cash dividend payments. However, different types of institutional investors have different impacts on dividends. While foreign investors have a significant impact on the level of dividends, local institutional investors do not have a significant effect. Also, this research reveals that free cash flow and leverage have a negative influence on cash dividend policies, while firm size, market-to-book value of equity, and return on assets have a positive influence on cash dividend policies.

Keywords: Institutional investor; dividends; Indonesian Stock Exchange (IDX)

ABSTRAK

Kajian ini menyiasat sama ada kehadiran institusi bebas mempengaruhi tahap pembayaran dividen tunai firma. Menggunakan data semua syarikat bukan kewangan yang tersenarai di Bursa Saham Indonesia (IDX) bagi tempoh penyelidikan 2010 hingga 2015, kajian ini melakukan analisis regresi. Hasilnya menunjukkan bahawa pelabur institusi bebas boleh mempengaruhi pembayaran dividen tunai. Walaubagaimanapun, perbezaan jenis pelabur institusi mempunyai kesan yang berbeza ke atas dividen. Selain itu, pelabur institusi bebas asing mempunyai keupayaan yang lebih besar dan lebih banyak insentif untuk mempengaruhi pembayaran dividen tunai berbanding pelabur institusi bebas tempatan. Kajian ini juga menunjukkan bahawa aliran tunai bebas dan leveraj mempunyai pengaruh negatif ke atas dasar dividen tunai, manakala saiz firma, nilai pasaran-kepada-nilai buku bagi ekuiti dan pulangan ke atas aset mempunyai pengaruh positif terhadap dasar dividen tunai.

Kata kunci: Pelabur bebas; dividen; Bursa Saham Indonesia (IDX)


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