Open AccessDo We Need a Regulation on Dividends for Indonesia Stock Exchange?
Author(s) -
Leo Indra Wardhana,
Eduardus Tandelilin
Publication year - 2018
Publication title -
gadjah mada international journal of business
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.192
H-Index - 9
eISSN - 2338-7238
pISSN - 1411-1128
DOI - 10.22146/gamaijb.25055
Subject(s) - dividend , stock exchange , indonesian , business , payment , dividend policy , monetary economics , life cycle hypothesis , stock (firearms) , dividend payout ratio , economics , financial economics , finance , macroeconomics , mechanical engineering , linguistics , philosophy , engineering
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.