Dividend Policy, Firms’ Characteristics and the Impact on the Southeast Asian Firms’ Value

Abstract

This research aims to analyze the factors determining the dividend policy of the Southeast Asian non-financial corporate sectors. In this research, the dividend policy of firms in Southeast Asia follows more closely the predictions of Modigliani-Miller theory, that dividend policy does not give impact to the firms' value, but the firms' characteristics include investment decision that supports to the firms' value. This research is verification research that aims to explain the causal relationship between the variables through hypothesis testing. The samples were taken by specifying multiple criteria. The criteria required in this research are: First, these companies are included in the non-financial industries. Second, the companies have been listed on the Capital Market in the selected countries in Southeast Asian Capital Market between 2000-2015. Third, from 2000 to 2015, the companies distributed the cash dividend. The study used panel data of companies listed in the capital market in selected countries in Southeast Asia. This study analyzes the dividend policy of non-financial companies in selected countries in Southeast Asia. This study showed that In Indonesia, the dividend payment was determined by the company's size, while in the Philippines, it was determined by the condition of the company's liquidity. Companies in five countries consistently showed that size was a significant factor affecting firm value. This finding implied that investors would be better off investing in large companies because the value tended to increase and, of course, would impact the welfare of shareholders. This study confirmed that the dividend payment showed a positive impact on the firm value in Malaysia and Philipina. Companies in the Philippines showed that dividends significantly affected firm value. Meanwhile, dividends were significantly influenced by company liquidity. Based on this study's results in the Philippines, dividend policy mediated the effect of liquidity on firm value.

How Do Profitability and Institutional Ownership Drive Value through Dividend Policy? Evidence from Nigeria

“…Based on signalling theory, we could hypothesise that dividend policy mediates the effects of some variables that impact firm value, but we need empirical testing before drawing conclusions. Empirical studies conducted in some regions and sectors have found support for the mediating effect of dividend policy (Hunjra, 2018;Santoso et al, 2020;Setyabudi, 2021;Surwanti & Pamungkas, 2021).…”

Dividend Policy and Shareholder Wealth: Evidence of Malaysia’s Top Five Listed Food and Beverages Companies

“…Accordingly, these earnings become a source of internal funding when the company decides to reinvest the retained earnings. The company will be less dependent on external sources of funds, strengthening the owner's equity position (Surwanti & Pamungkas, 2021). Investors exhibit positive sentiments when companies pay regular and high dividends (Surwanti & Pamungkas, 2021), attracting potential investors and enhancing the firm's value, ultimately maximising the shareholder wealth.…”

“…The company will be less dependent on external sources of funds, strengthening the owner's equity position (Surwanti & Pamungkas, 2021). Investors exhibit positive sentiments when companies pay regular and high dividends (Surwanti & Pamungkas, 2021), attracting potential investors and enhancing the firm's value, ultimately maximising the shareholder wealth. The dividend decision is one of the most critical elements emphasised by companies as theories frequently link this factor with market value (Thirumagal & Vasantha, 2018).…”