Pengujian Life Cycle Model of Dividends Sektor Perbankan di Bursa Efek Indonesia

Muhamad Umar Mai

doi:10.33795/jraam.v6i1.002

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Abstract

This study examines the Life Cycle Model of Dividends (LCMD) of the banking sector on the Indonesia Stock Exchange (IDX) during the period 2005-2020. This study uses secondary data which was analyzed by logistic regression. The results of this study indicate that the dividend policy of the bank sector on the IDX tends to follow the LCMD. Another important result is that the Capital Adequacy Ratio, which is not a proxy for the LCMD variable, also shows an important role in determining dividend policy for the bank sector on the IDX.

Abstrak

Penelitian ini menguji Life Cycle Model of Dividends (LCMD) sektor perbankan di Bursa Efek Indonesia (BEI) selama periode 2005-2020. Penelitian ini menggunakan data sekunder yang dianalisis dengan regresi logistik. Hasil penelitian ini mengindikasikan bahwa kebijakan dividen sektor bank di BEI cenderung mengikuti LCMD. Hasil penting lainnya adalah bahwa Capital Adequacy Ratio, yang bukan merupakan proksi variabel LCMD, juga menunjukkan peranan yang penting dalam menentukan kebijakan dividen bagi sektor bank di BEI.

Keywords

Banking sector dividends policy Indonesia stock exchange Life cycle model

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This work is licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.

References

R. Kim, “Dividend reputation, dividend yield and stock returns in Korea,” J. Deriv. Quant. Stud., vol. 29, no. 1, pp. 73–99, 2021, doi: 10.1108/jdqs-09-2020-0023.
B. Al-Najjar and E. Kilincarslan, “What do we know about the dividend puzzle? – A literature survey,” Int. J. Manag. Financ., vol. 15, no. 2, pp. 205–235, 2019, doi: 10.1108/IJMF-03-2018-0090.
M. Rajput and S. Jhunjhunwala, “Corporate governance and payout policy: evidence from India,” Corp. Gov., vol. 19, no. 5, pp. 1117–1132, 2019, doi: 10.1108/CG-07-2018-0258.
E. F. Fama and K. R. French, “Disappearing Dividends: Changing Firm Characteristics or Lower Propensity to Pay?,” J. Appl. Corp. Financ., vol. 60, no. 1, pp. 3–43, 2001. doi: 10.1016/S0304-405X(01)00038-1
G. Grullon, R. Michaely, S. Benartzi, and R. H. Thaler, “Dividend changes do not signal changes in future profitability,” J. Bus., vol. 78, no. 5, pp. 1659–1682, 2005, doi: 10.1086/431438.
H. DeAngelo, L. DeAngelo, and R. M. Stulz, “Dividend policy and the earned/contributed capital mix: a test of the lifecycle theory,” J. financ. econ., vol. 8, no. 1, pp. 227–254, 2006, doi: 10.1016/j.jfineco.2005.07.005.
D. J. Denis and I. Osobov, “Why do firms pay dividends? International evidence on the determinants of dividend policy,” J. financ. econ., 2008, doi: 10.1016/j.jfineco.2007.06.006.
Y. Thanatawee, “Life-Cycle Theory and Free Cash Flow Hypothesis: Evidence from Dividend Policy in Thailand,” Int. J. Financ. Res., vol. 2,no. 2, pp. 52–60, 2011, doi: 10.5430/ijfr.v2n2p52.
R. Ranajee, R. Pathak, and A. Saxena, “To pay or not to pay: what matters the most for dividend payments?,” Int. J. Manag. Financ., vol. 14, no. 2, pp. 230–244, 2018, doi: 10.1108/IJMF-07-2017-0144.
H. K. Singla and P. K. Samanta, “Determinants of dividend payout of construction companies: a panel data analysis,” J. Financ. Manag. Prop. Constr., vol. 24, no. 1, pp. 19–38, 2019, doi: 10.1108/JFMPC-06-2018-0030.
N. J. Dewasiri, W. B. Yatiwelle Koralalage, A. Abdul Azeez, P. G. S. A. Jayarathne, D. Kuruppuarachchi,and V. A. Weerasinghe, “Determinants of dividend policy: evidence from an emerging and developing market,” Manag. Financ., vol. 45, no. 3, pp. 413–429, 2019, doi: 10.1108/MF-09-2017-0331.
B. K. Dixit, N. Gupta, and S. Saurabh, “Dividend policy in India: reconciling theory and evidence,” Manag. Financ., vol. 46, no. 11, pp. 1437–1453, 2020, doi: 10.1108/MF-07-2019-0344.
I. Yousef, S. Tanna, and S. Patra,“Testing dividend life-cycle theory in the Islamic and conventional banking sectors of GCC countries,” J. Islam. Account. Bus. Res., vol. 12, no. 2, pp.276–300, 2021, doi: 10.1108/JIABR-04-2020-0115.
H. K. Baker and E. Kilincarslan,“Why companies do not pay cash dividends: The Turkish experience,” Glob. Financ. J., vol. 42, no. February, pp. 2–18, 2019, doi: 10.1016/j.gfj.2018.02.005.
M. Hassani and F. Kazem Pour Dizaji, “Life cycle theory and dividend payout policy: Evidence from Tehran Stock Exchange,” Manag. Sci. Lett., vol. 3, pp. 2631–2634, 2013, doi: 10.5267/j.msl.2013.09.005.
D. Bhattacharya, C. W. Chang, and W. H. Li, “Stages of firm life cycle,
transition, and dividend policy,” Financ. Res. Lett., vol. 33, 2020, doi: 10.1016/j.frl.2019.06.024.
N. Kuzucu, “Determinants of Dividend Policy: A Panel Data Analysis for Turkish Listed Firms,” Int. J. Bus. Manag., vol. 10, no. 11, pp. 149–160, 2015, doi: 10.5539/ijbm.v10n11p149.
Y. Yusof and S. Ismail, “Determinants of dividend policy of public listed companies in Malaysia,” Rev. Int. Bus. Strateg., vol. 26, no. 1, pp. 1–20, 2016. doi: 10.1108/RIBS-02-2014-0030.
M. Faccio, L. H. P. Lang, and L. Young, “Dividends and expropriation,” Am. Econ. Rev., vol. 91, no. 1, pp. 54–78, 2001, doi:10.1257/aer.91.1.54.
T. Flavin and T. O’Connor, “Reputation building and the lifecycle model of dividends,” Pacific Basin Financ. J., 2017, doi:10.1016/j.pacfin.2017.09.006.
F. Trihermanto and Y. A. Nainggolan, “Corporate life cycle, CSR, and dividend policy: empirical evidence of Indonesian listed firms,” Soc. Responsib. J., vol. 16, no. 2, pp. 159–178, 2018, doi: 10.1108/SRJ-09-2017-0186.
P. G. Thirumagal and S. Vasantha,“Dividend Payout Determinants:Evidence from Indian Industries,” Int. J. Pure Appl. Math., vol. 117, no. 21,pp. 811–829, 2017.
R. Hauser and J. H. Thornton,“Dividend policy and corporate valuation,” Manag. Financ., vol. 43,
no. 6, pp. 663–678, 2017, doi:10.1108/MF-05-2015-0157.
A. R. Budagaga, “Determinants of banks’ dividend payment decisions: evidence from MENA countries,” Int. J. Islam. Middle East. Financ. Manag., vol. 13, no. 5, pp. 847–871, 2020, doi: 10.1108/IMEFM-09-2019-0404.
P. O. Ihejirika and P. C. Nwakanma,“An Empirical Analysis of the Propensity to Pay or Not to Pay Dividends : A Test of the Life Cycle Theory with Nigerian Data,” Oman Chapter Arab. J. Bus. Manag. Rev., vol. 1, no. 12, pp. 74–87, 2012, doi: 10.12816/0002233.
H. K. Baker, N. J. Dewasiri, S. P. Premaratne, and W. Yatiwelle Koralalage, “Corporate governance and dividend policy in Sri Lankanfirms: a data triangulation approach,” Qual. Res. Financ. Mark., vol. 12, no. 4, pp. 543–560, 2020, doi:10.1108/QRFM-11-2019-0134.
L. Lepetit, C. Meslier, F. Strobel, and L. Wardhana, “Bank dividends, agency costs and shareholder and creditor rights,” Int. Rev. Financ. Anal., vol. 56, pp. 93–111, 2018, doi: 10.1016/j.irfa.2017.12.007.
Y. Hsiao and Y. Tseng, “Bank Capital Regulation and Dividend Policy,” J. Financ. Stud., vol. 24, no. 3, pp. 45–68, 2014, [Online]. Available: https://www.sfm.url.tw/24thSFM/pdf/pastawardpapers/2014-07.pdf.
K. Imran, M. Usman, and M. Nishat, “Banks dividend policy: Evidence from Pakistan,” Econ. Model., vol. 32,no. 1, pp. 88–90, 2013, doi: 10.1016/j.econmod.2013.01.041.
B. N. Ashraf, S. Arshad, M. M. Rahman, M. A. Kamal, and K. Khan, “Regulatory hypothesis and bank dividend payouts: Empirical evidence from Italian banking sector,” J. Financ. Eng., vol. 02, no. 01, p.1550009, 2015, doi:10.1142/s2345768615500099.
C. Forti and R. F. Schiozer, “Bank dividends and signaling to information-sensitive depositors,” J. Bank. Financ., vol. 56, no. February, pp. 1–11, 2015, doi:10.1016/j.jbankfin.2015.02.011.
M. L. Banyi and K. M. Kahle, “Declining propensity to pay? A re examination of the lifecycle theory,” J.Corp. Financ., vol. 27, pp. 345–366,2014, doi:10.1016/j.jcorpfin.2014.06.001.
N. S. Budiarso, B. Subroto, T. Sutrisno, and W. Pontoh, “Dividend catering, life-cycle, and policy: Evidence from Indonesia,” Cogent Econ. Financ., vol. 7, no. 1, pp. 1–15,2019, doi:10.1080/23322039.2019.1594505.
L. T. Al-Kayed, “Dividend payout policy of Islamic vs conventional banks: case of Saudi Arabia,” Int. J. Islam. Middle East. Financ. Manag., vol. 10, no. 1, pp. 117–128, 2017, doi: 10.1108/IMEFM-09-2015-0102.
B. Al-Najjar, “The inter-relationship between capital structure and dividend policy: Empirical evidence from jordanian data,” Int. Rev. Appl. Econ.,vol. 25, no. 2, pp. 209–224, 2011, doi: 10.1080/02692171.2010.483464.
G. A. Bokpin, “Ownership structure, corporate governance and dividend performance on the Ghana Stock Exchange,” J. Appl. Account. Res., vol. 12, no. 1, pp. 61–73, 2011, doi:10.1108/09675421111130612.
H. Kimie and N. Pascal, “Ownership concentration and dividend policy in Japan,” Manag. Financ., vol. 37, no. 4, pp. 362–379, 2011, doi: 10.1108/03074351111115313.
T. Afza and H. H. Mirza, “Do Mature Companies Pay More Dividends? Evidence from Pakistani Stock Market,” Mediterr. J. Soc. Sci., vol. 2, no. 2, pp. 152–161, 2011, doi: 10.36941/mjss. [39] L. Barseghyan, “Non-performing loans, prospective bailouts, and Japan’s slowdown,” J. Monet. Econ.,vol. 57, no. 7, pp. 873–890, 2010, doi:10.1016/j.jmoneco.2010.08.002.

References

R. Kim, “Dividend reputation, dividend yield and stock returns in Korea,” J. Deriv. Quant. Stud., vol. 29, no. 1, pp. 73–99, 2021, doi: 10.1108/jdqs-09-2020-0023.

B. Al-Najjar and E. Kilincarslan, “What do we know about the dividend puzzle? – A literature survey,” Int. J. Manag. Financ., vol. 15, no. 2, pp. 205–235, 2019, doi: 10.1108/IJMF-03-2018-0090.

M. Rajput and S. Jhunjhunwala, “Corporate governance and payout policy: evidence from India,” Corp. Gov., vol. 19, no. 5, pp. 1117–1132, 2019, doi: 10.1108/CG-07-2018-0258.

E. F. Fama and K. R. French, “Disappearing Dividends: Changing Firm Characteristics or Lower Propensity to Pay?,” J. Appl. Corp. Financ., vol. 60, no. 1, pp. 3–43, 2001. doi: 10.1016/S0304-405X(01)00038-1

G. Grullon, R. Michaely, S. Benartzi, and R. H. Thaler, “Dividend changes do not signal changes in future profitability,” J. Bus., vol. 78, no. 5, pp. 1659–1682, 2005, doi: 10.1086/431438.

H. DeAngelo, L. DeAngelo, and R. M. Stulz, “Dividend policy and the earned/contributed capital mix: a test of the lifecycle theory,” J. financ. econ., vol. 8, no. 1, pp. 227–254, 2006, doi: 10.1016/j.jfineco.2005.07.005.

D. J. Denis and I. Osobov, “Why do firms pay dividends? International evidence on the determinants of dividend policy,” J. financ. econ., 2008, doi: 10.1016/j.jfineco.2007.06.006.

Y. Thanatawee, “Life-Cycle Theory and Free Cash Flow Hypothesis: Evidence from Dividend Policy in Thailand,” Int. J. Financ. Res., vol. 2,no. 2, pp. 52–60, 2011, doi: 10.5430/ijfr.v2n2p52.

R. Ranajee, R. Pathak, and A. Saxena, “To pay or not to pay: what matters the most for dividend payments?,” Int. J. Manag. Financ., vol. 14, no. 2, pp. 230–244, 2018, doi: 10.1108/IJMF-07-2017-0144.

H. K. Singla and P. K. Samanta, “Determinants of dividend payout of construction companies: a panel data analysis,” J. Financ. Manag. Prop. Constr., vol. 24, no. 1, pp. 19–38, 2019, doi: 10.1108/JFMPC-06-2018-0030.

N. J. Dewasiri, W. B. Yatiwelle Koralalage, A. Abdul Azeez, P. G. S. A. Jayarathne, D. Kuruppuarachchi,and V. A. Weerasinghe, “Determinants of dividend policy: evidence from an emerging and developing market,” Manag. Financ., vol. 45, no. 3, pp. 413–429, 2019, doi: 10.1108/MF-09-2017-0331.

B. K. Dixit, N. Gupta, and S. Saurabh, “Dividend policy in India: reconciling theory and evidence,” Manag. Financ., vol. 46, no. 11, pp. 1437–1453, 2020, doi: 10.1108/MF-07-2019-0344.

I. Yousef, S. Tanna, and S. Patra,“Testing dividend life-cycle theory in the Islamic and conventional banking sectors of GCC countries,” J. Islam. Account. Bus. Res., vol. 12, no. 2, pp.276–300, 2021, doi: 10.1108/JIABR-04-2020-0115.

H. K. Baker and E. Kilincarslan,“Why companies do not pay cash dividends: The Turkish experience,” Glob. Financ. J., vol. 42, no. February, pp. 2–18, 2019, doi: 10.1016/j.gfj.2018.02.005.

M. Hassani and F. Kazem Pour Dizaji, “Life cycle theory and dividend payout policy: Evidence from Tehran Stock Exchange,” Manag. Sci. Lett., vol. 3, pp. 2631–2634, 2013, doi: 10.5267/j.msl.2013.09.005.

D. Bhattacharya, C. W. Chang, and W. H. Li, “Stages of firm life cycle,

transition, and dividend policy,” Financ. Res. Lett., vol. 33, 2020, doi: 10.1016/j.frl.2019.06.024.

N. Kuzucu, “Determinants of Dividend Policy: A Panel Data Analysis for Turkish Listed Firms,” Int. J. Bus. Manag., vol. 10, no. 11, pp. 149–160, 2015, doi: 10.5539/ijbm.v10n11p149.

Y. Yusof and S. Ismail, “Determinants of dividend policy of public listed companies in Malaysia,” Rev. Int. Bus. Strateg., vol. 26, no. 1, pp. 1–20, 2016. doi: 10.1108/RIBS-02-2014-0030.

M. Faccio, L. H. P. Lang, and L. Young, “Dividends and expropriation,” Am. Econ. Rev., vol. 91, no. 1, pp. 54–78, 2001, doi:10.1257/aer.91.1.54.

T. Flavin and T. O’Connor, “Reputation building and the lifecycle model of dividends,” Pacific Basin Financ. J., 2017, doi:10.1016/j.pacfin.2017.09.006.

F. Trihermanto and Y. A. Nainggolan, “Corporate life cycle, CSR, and dividend policy: empirical evidence of Indonesian listed firms,” Soc. Responsib. J., vol. 16, no. 2, pp. 159–178, 2018, doi: 10.1108/SRJ-09-2017-0186.

P. G. Thirumagal and S. Vasantha,“Dividend Payout Determinants:Evidence from Indian Industries,” Int. J. Pure Appl. Math., vol. 117, no. 21,pp. 811–829, 2017.

R. Hauser and J. H. Thornton,“Dividend policy and corporate valuation,” Manag. Financ., vol. 43,

no. 6, pp. 663–678, 2017, doi:10.1108/MF-05-2015-0157.

A. R. Budagaga, “Determinants of banks’ dividend payment decisions: evidence from MENA countries,” Int. J. Islam. Middle East. Financ. Manag., vol. 13, no. 5, pp. 847–871, 2020, doi: 10.1108/IMEFM-09-2019-0404.

P. O. Ihejirika and P. C. Nwakanma,“An Empirical Analysis of the Propensity to Pay or Not to Pay Dividends : A Test of the Life Cycle Theory with Nigerian Data,” Oman Chapter Arab. J. Bus. Manag. Rev., vol. 1, no. 12, pp. 74–87, 2012, doi: 10.12816/0002233.

H. K. Baker, N. J. Dewasiri, S. P. Premaratne, and W. Yatiwelle Koralalage, “Corporate governance and dividend policy in Sri Lankanfirms: a data triangulation approach,” Qual. Res. Financ. Mark., vol. 12, no. 4, pp. 543–560, 2020, doi:10.1108/QRFM-11-2019-0134.

L. Lepetit, C. Meslier, F. Strobel, and L. Wardhana, “Bank dividends, agency costs and shareholder and creditor rights,” Int. Rev. Financ. Anal., vol. 56, pp. 93–111, 2018, doi: 10.1016/j.irfa.2017.12.007.

Y. Hsiao and Y. Tseng, “Bank Capital Regulation and Dividend Policy,” J. Financ. Stud., vol. 24, no. 3, pp. 45–68, 2014, [Online]. Available: https://www.sfm.url.tw/24thSFM/pdf/pastawardpapers/2014-07.pdf.

K. Imran, M. Usman, and M. Nishat, “Banks dividend policy: Evidence from Pakistan,” Econ. Model., vol. 32,no. 1, pp. 88–90, 2013, doi: 10.1016/j.econmod.2013.01.041.

B. N. Ashraf, S. Arshad, M. M. Rahman, M. A. Kamal, and K. Khan, “Regulatory hypothesis and bank dividend payouts: Empirical evidence from Italian banking sector,” J. Financ. Eng., vol. 02, no. 01, p.1550009, 2015, doi:10.1142/s2345768615500099.

C. Forti and R. F. Schiozer, “Bank dividends and signaling to information-sensitive depositors,” J. Bank. Financ., vol. 56, no. February, pp. 1–11, 2015, doi:10.1016/j.jbankfin.2015.02.011.

M. L. Banyi and K. M. Kahle, “Declining propensity to pay? A re examination of the lifecycle theory,” J.Corp. Financ., vol. 27, pp. 345–366,2014, doi:10.1016/j.jcorpfin.2014.06.001.

N. S. Budiarso, B. Subroto, T. Sutrisno, and W. Pontoh, “Dividend catering, life-cycle, and policy: Evidence from Indonesia,” Cogent Econ. Financ., vol. 7, no. 1, pp. 1–15,2019, doi:10.1080/23322039.2019.1594505.

L. T. Al-Kayed, “Dividend payout policy of Islamic vs conventional banks: case of Saudi Arabia,” Int. J. Islam. Middle East. Financ. Manag., vol. 10, no. 1, pp. 117–128, 2017, doi: 10.1108/IMEFM-09-2015-0102.

B. Al-Najjar, “The inter-relationship between capital structure and dividend policy: Empirical evidence from jordanian data,” Int. Rev. Appl. Econ.,vol. 25, no. 2, pp. 209–224, 2011, doi: 10.1080/02692171.2010.483464.

G. A. Bokpin, “Ownership structure, corporate governance and dividend performance on the Ghana Stock Exchange,” J. Appl. Account. Res., vol. 12, no. 1, pp. 61–73, 2011, doi:10.1108/09675421111130612.

H. Kimie and N. Pascal, “Ownership concentration and dividend policy in Japan,” Manag. Financ., vol. 37, no. 4, pp. 362–379, 2011, doi: 10.1108/03074351111115313.

T. Afza and H. H. Mirza, “Do Mature Companies Pay More Dividends? Evidence from Pakistani Stock Market,” Mediterr. J. Soc. Sci., vol. 2, no. 2, pp. 152–161, 2011, doi: 10.36941/mjss. [39] L. Barseghyan, “Non-performing loans, prospective bailouts, and Japan’s slowdown,” J. Monet. Econ.,vol. 57, no. 7, pp. 873–890, 2010, doi:10.1016/j.jmoneco.2010.08.002.

Pengujian Life Cycle Model of Dividends Sektor Perbankan di Bursa Efek Indonesia

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