The Effect of Corporate Governance toward  Dividend Payout Ratio

Werner Ria Murhadi; Regina Vanessa  Tjipta; Endang Ernawati

doi:10.24123/jeb.v3i2.4948

Werner Ria Murhadi Management Department, University of Surabaya http://orcid.org/0000-0002-7297-861X
Regina Vanessa Tjipta Management Department, University of Surabaya
Endang Ernawati Management Department, University of Surabaya

DOI: https://doi.org/10.24123/jeb.v3i2.4948

Abstract Views: 285 times

PDF Downloads: 224 times

Keywords: Female independent commissioners, Board size, Board meeting, Audit committee size, Dividend payout ratio

Abstract

Pupose: The existence of market uncertainty can increase agency problems that raise doubts about future cash flows, such as dividend payments. This study aims to analyze the effect of corporate governance such as the proportion of female commissioners, the proportion of female independent commissioners, the board size, board independence, board meeting, and audit committee size towards a dividend payout ratio.

Method:
The sample of this research is manufacturing sector companies listed on the Indonesia Stock Exchange (ISE) and the Thailand Stock Exchange (TSE). The company should have published financial reports that have been audited regularly during the study period, and the company has no negative retained earnings. This study uses a quantitative approach with two least square regression analysis models.

Result: The observations on the ISE shows that the proportion of female independent commissioners and audit committee size has a significant positive effect on the dividend payout ratio. This result is because female commissioners can take control of minority shareholders by making larger payments and audit committee members can monitor more effectively and control opportunistic behavior. However, board independence and board meeting significantly adversely affect the dividend payout ratio, this is because more members of board independence and more frequent meetings can use dividends as a substitute role in reducing agency problems so that dividend payment will be below. The observations on the TSE shows that the proportion of female independent commissioners and board meetings significantly positively affects the dividend payout ratio. However, board independence has a significant adverse effect on the dividend payout ratio. This result is because board independence tends to reduce agency costs, so using dividends as a substitute role to reduce dividend payments.

Downloads

Download data is not yet available.

References

Adiputra, I. G., & Hermawan, A. (2020). The effect of corporate social responsibility, firm size, dividend policy and liquidity on firm value: Evidence from manufacturing companies in Indonesia. International Journal of Innovation, Creativity and Change, 11(6), 325–338.

Asali, F., Murhadi, W. R., & Sutejo, B. S. (2020). The effect of corporate governance and financial factors on dividend payment. Contemporary Research on Business and Management: Proceedings of the International Seminar of Contemporary Research on Business and Management (ISCRBM 2019), 27-29 November, 2019, Jakarta, Indonesia, 248. CRC Press.

Benjamin, S. J., & Zain, M. M. (2015). Corporate governance and dividends payout: are they substitutes or complementary? Journal of Asia Business Studies, 9(2), 177–194. https://doi.org/https://dx.doi.org/10.1108/JABS-08-2014-0062

Chen, J., Leung, W. S., & Goergen, M. (2017). The impact of board gender composition on dividend payouts. Journal of Corporate Finance, 43, 86–105.

Damayanti, R., Marwati, F. S., & Widayanti, R. (2017). Analisa kebijakan dividen berdasarkan teori lintner. AGREGAT: Jurnal Ekonomi Dan Bisnis, 1(2), 183–194.

Elmagrhi, M. H., Ntim, C. G., Crossley, R. M., Malagila, J. K., Fosu, S., & Vu, T. V. (2017). Corporate governance and dividend pay-out policy in UK listed SMEs: The effects of corporate board characteristics. International Journal of Accounting & Information Management, 25(4), 459–483. https://doi.org/https://dx.doi.org/10.1108/IJAIM-02-2017-0020

Fauziah, E. I., & Probohudono, A. N. (2018). Direksi dan dewan komisaris: Pengaruh dewan wanita terhadap kebijakan dividen di Indonesia. Jurnal Akuntansi Dan Bisnis, 18(1), 61–73.

Fitriandi, P. (2019). Pajak Berganda Secara Ekonomis Atas Penghasilan Dividen Di Indonesia Dan Alternatif Penyelesaiannya. Jurnal Pajak Indonesia (Indonesian Tax Journal), 2(1), 68–76.

Gordini, N., & Rancati, E. (2017). Gender diversity in the Italian boardroom and firm financial performance. Management Research Review.

Gunawan, K. E., Murhadi, W. R., & Herlambang, A. (2019). The effect of good corporate governance on dividend policy. Proceedings of the 16th International Symposium on Management (INSYMA 2019). https://doi.org/10.2991/insyma-19.2019.15

Kumalasari, A., & Widyawati, D. (2017). Pengaruh Good Corporate Governance Dan Kebijakan Dividen Terhadap Nilai Perusahaan LQ 45. Jurnal Ilmu Dan Riset Akuntansi (JIRA), 6(6), 223–232.

Kurniawan, W. A., & Jin, T. F. (2017). Faktor-Faktor Yang Mempengaruhi Kebijakan Dividen Pada Perusahaan Non Keuangan Yang Terdaftar Di Bursa Efek Indonesia. Jurnal Bisnis Dan Akuntansi, 19(1a-3), 191–199.

Mai, M. U. (2015). Pengaruh corporate governance mechanism terhadap nilai perusahaan melalui pertumbuhan, profitabilitas dan kebijakan dividen. Ekuitas (Jurnal Ekonomi Dan Keuangan), 19(1), 42–65.

Masruroh, R. N., Wijaya, A. L., & Widiasmara, A. (2019). Pengaruh Corporate Governance, Free Cash Flow dan Investment Opportunity Set terhadap Dividend Payout Ratio (Studi Pada Perusahaan Pertambangan yang Terdaftar di Bursa Efek Indonesia Pada Tahun 2012-2018). SIMBA: Seminar Inovasi Manajemen, Bisnis, Dan Akuntansi, 1.

Murhadi, W R. (2008). Studi Kebijakan Deviden: Anteseden dan Dampaknya Terhadap Harga Saham. Jurnal Manajemen Dan Kewirausahaan. Retrieved from https://ojs.petra.ac.id/ojsnew2/index.php/man/article/view/16788

Murhadi, Werner Ria. (2010). Study on Dividend Policy: Antecedent and its Impact on Share Price. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1686109

Putra, E. D., & Adrianto, F. (2019). Aanalisis Perbandingan Profitability, Effective Governance and Firm Market Value pada Perusahaan ESG/SRI (Studi Empiris Perusahaan Besar di Indonesia). Jurnal Ilmiah Mahasiswa Ekonomi Manajemen, 4(4), 753–772.

Sani, A., & Musa, A. (2017). Corporate Board Attributes and Dividend Payout Policy of Listed Deposit Money Banks in Nigeria. International Journal of Research in IT, Management and Engineering, ISSN, 7(1), 7–13.

Tahir, H., Rahman, M., & Masri, R. (2020). Do board traits influence firms’ dividend payout policy? Evidence from Malaysia. The Journal of Asian Finance, Economics, and Business, 7(3), 87–99.

Ye, D., Deng, J., Liu, Y., Szewczyk, S. H., & Chen, X. (2019). Does board gender diversity increase dividend payouts? Analysis of global evidence. Journal of Corporate Finance, 58, 1–26.