Open Access Open Access  Restricted Access Subscription Access

The Impact of Family Control on Dividend Policy: Evidence from Indonesia

Lukas Setia-Atmaja

Abstract


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).

DOI : https://doi.org/10.21632/irjbs.9.2.147-156 

Keywords:
Family Control, Dividends, Agency Theory


Full Text:

PDF pp.147-156

Refbacks

  • There are currently no refbacks.




Recent Articles

How do Entrepreneurial Human Resource Practices Determine Small Firms’ Performance?(pp 133-164) doi.org/10.21632/irjbs.9.3.133-146

Sulaimiah, Sulhaini

December 2016 - March 2017

The Impact of Family Control on Dividend Policy: Evidence from Indonesia (pp 147 156) doi.org/10.21632/irjbs.9.3.147-156

Lukas Setia-Atmaja

December 2016 - March 2017

Accountability and Incumbent Re-election in Indonesian Local Government (pp 157-168) doi.org/10.21632/irjbs.9.3.157-168

Retno Yuliati, Soemarso Slamet Raharjo, Dodik Siswantoro

Recent Articles

Business Process Reengineering of Sustainable Teak Forest at Agroforestry Industry (pp 169-183) doi.org/10.21632/irjbs.9.3.169-183

Muhammad Alkaff, Marimin Marimin, Yandra Arkeman, Sukardi Sukardi, Herry Purnomo

December 2016 - March 2017

The Organizational Attraction at Company-Owned University (pp 185-197)

Rocky Rocky, Rayini Dahesihsari