The Impact of Family Control on Dividend Policy: Evidence from Indonesia
This paper examines the relationship between family control and dividend policy in Indonesia. There are three possible explanations for the relationship. The expropriation hypothesis predicts that family control has a negative impact on dividend payouts. Meanwhile the reputation hypothesis and the f...
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| Format: | Article |
| Language: | English |
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Prasetiya Mulya Publishing
2016-12-01
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| Series: | International Research Journal of Business Studies |
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| Online Access: | http://www.irjbs.com/index.php/jurnalirjbs/article/view/1169 |
| _version_ | 1819090467107635200 |
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| author | Lukas Setia Atmaja |
| author_facet | Lukas Setia Atmaja |
| author_sort | Lukas Setia Atmaja |
| collection | DOAJ |
| description | This paper examines the relationship between family control and dividend policy in Indonesia. There are three possible explanations for the relationship. The expropriation hypothesis predicts that family control has a negative impact on dividend payouts. Meanwhile the reputation hypothesis and the family income hypothesis predict that family control has a positive impact on dividend payouts. Using a panel data of Indonesian publicly listed firms in the period of 2003-2009, the results shows that family control has a significant negative impact on dividend payouts, dividend yields and likelyhood to pay dividends. The results control for other variables that may potentially affect dividend payments such as growth opportunity, debt, profitability, firm size and firm age. From agency theory perspective, the finding is consistent with the argument that family controlling shareholders prefer lower dividends, in order to preserve cash flows that they can potentially expropriate (the expropriation hypothesis). |
| first_indexed | 2024-12-21T22:24:17Z |
| format | Article |
| id | doaj.art-cb39225dcbaa4f0bb5f05b8c552d3f82 |
| institution | Directory Open Access Journal |
| issn | 2089-6271 2338-4565 |
| language | English |
| last_indexed | 2024-12-21T22:24:17Z |
| publishDate | 2016-12-01 |
| publisher | Prasetiya Mulya Publishing |
| record_format | Article |
| series | International Research Journal of Business Studies |
| spelling | doaj.art-cb39225dcbaa4f0bb5f05b8c552d3f822022-12-21T18:48:16ZengPrasetiya Mulya PublishingInternational Research Journal of Business Studies2089-62712338-45652016-12-019314715610.21632/irjbs.9.2.147-156 The Impact of Family Control on Dividend Policy: Evidence from IndonesiaLukas Setia Atmaja0School of Business & Economics, Universitas Prasetiya MulyaThis paper examines the relationship between family control and dividend policy in Indonesia. There are three possible explanations for the relationship. The expropriation hypothesis predicts that family control has a negative impact on dividend payouts. Meanwhile the reputation hypothesis and the family income hypothesis predict that family control has a positive impact on dividend payouts. Using a panel data of Indonesian publicly listed firms in the period of 2003-2009, the results shows that family control has a significant negative impact on dividend payouts, dividend yields and likelyhood to pay dividends. The results control for other variables that may potentially affect dividend payments such as growth opportunity, debt, profitability, firm size and firm age. From agency theory perspective, the finding is consistent with the argument that family controlling shareholders prefer lower dividends, in order to preserve cash flows that they can potentially expropriate (the expropriation hypothesis).http://www.irjbs.com/index.php/jurnalirjbs/article/view/1169family controldividendsagency theory |
| spellingShingle | Lukas Setia Atmaja The Impact of Family Control on Dividend Policy: Evidence from Indonesia International Research Journal of Business Studies family control dividends agency theory |
| title | The Impact of Family Control on Dividend Policy: Evidence from Indonesia |
| title_full | The Impact of Family Control on Dividend Policy: Evidence from Indonesia |
| title_fullStr | The Impact of Family Control on Dividend Policy: Evidence from Indonesia |
| title_full_unstemmed | The Impact of Family Control on Dividend Policy: Evidence from Indonesia |
| title_short | The Impact of Family Control on Dividend Policy: Evidence from Indonesia |
| title_sort | impact of family control on dividend policy evidence from indonesia |
| topic | family control dividends agency theory |
| url | http://www.irjbs.com/index.php/jurnalirjbs/article/view/1169 |
| work_keys_str_mv | AT lukassetiaatmaja theimpactoffamilycontrolondividendpolicyevidencefromindonesia AT lukassetiaatmaja impactoffamilycontrolondividendpolicyevidencefromindonesia |