Antoni Susanto
ERION Computer

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DIVIDEND PAYOUT RATIO: FACTORS THAT AFFECT IT, AND SUBSEQUENT EARNING GROWTH Antoni Susanto; Junius Tirok
Journal of Applied Finance & Accounting Vol. 6 No. 1 (2013): Publish on November 2013
Publisher : Bina Nusantara University

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.21512/jafa.v6i1.838

Abstract

This paper is to investigate the determinants of the Dividend Payout Ratio (DPR) of Indonesian firms. Five factors (maturity, cash availability, leverage, profitability, firm size) are analyzed as the DPR determinants.  Additionally, this thesis also examines the ability of DPR to serve as a signal subsequent year’s earnings growth. Multiple regression models is used in this paper to analyze research sample that consists of 180 firms that are listed in Indonesia Stock Exchange (IDX) and paid dividends during 2003-2008. The results shows that cash availability and maturity are significant determinants of DPR. Further analysis shows that the DPR signals subsequent earnings growth, the result concludes that mature firms has high dividend payment ratio, which supports firm lifecycle theory. High DPR results in high subsequent earnings growth, which supports Black’s (1976) claim that DPR carries information on future growth.