The influence of financial flexibility on Indonesian companies’ dividend policy
Daftar Isi:
- The objective of this research is to analyze how financial flexibility will influence the Indonesian companies’ dividend policy. Financial flexibility will be represented by liquidity, debt, idiosyncratic risk, operating performance, firm size, and growth opportunities. While, dividend policy will be represented by dividend yield. This research involves companies from non-financial industries and are not categorized as BUMN, which listed in Indonesia Stock Exchange (IDX). The numbers of samples are 167 companies or equivalent to 1,002 observations. This research uses balanced panel data from 2003 to 2008. Hausman test and redundant fixed effects test are used to determine the appropriate model. Based on the tests, the best model for this research is two way fixed effects model. Sensitivity analysis is also used to ensure the robustness of the result. The result shows that the financial flexibility has significant influence on Indonesian companies’ dividend policy. Two indicators of financial flexibility which have significant influence on dividend policy are liquidity and idiosyncratic risk. Dividend policy is positively influenced by liquidity and negatively influenced by idiosyncratic risk.