We investigate how a firm’s decision to hold excessive cash or to overinvest could influence its dividend payout policy in Indonesia. Additionally, we examine the association between corporate ownership structure and cash dividends. Using a data set of Indonesian listed firms for the period from 1995 to 2014, we find that excessive cash holding (overinvestment) positively (negatively) affects a firm’s likelihood of paying dividends. Also, we find that family, foreign, state and institutional ownership have significantly negative links with dividends, which suggests the signals of expropriation of firms’ wealth by major shareholders. These findings strongly support the expropriation hypothesis that commonly applies to firms with higher level of concentration or to firms in a weak legal environment by which the rights of minority interests are put at risk by large shareholders.
|Number of pages||44|
|Journal||Review of Quantitative Finance and Accounting|
|Early online date||5 Dec 2019|
|Publication status||Published - 1 Oct 2020|
- Corporate governance
- Dividend policy
- Ownership structure
ASJC Scopus subject areas
- Business, Management and Accounting(all)
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- Research Centre for Financial & Corporate Integrity - Professor of Finance
Person: Teaching and Research