Title: Reciprocal Relationship between Capital Structure and Dividend Policy in Indonesia 2010 – 2012

Authors: Ninnasi Muttaqiin

Item Type: Thesis

Affiliations: Master of Science in Management Study Program, Faculty of Economics and Business, Universitas Airlangga , Surabaya, Indonesia

Publisher: Universitas Airlangga

Abstract

This study aims to determine the reciprocal influence between capital structure and dividend policy in Indonesia with the research period of 2010 to 2012. Using the two-stage least squares method with capital structure factors and dividend payout ratio as endogenous variables, while institutional ownership, tangibility, growth opportunity, liquidity, profitability, business risk, firm size, and free cash flow as exogenous variables in the study. This study uses a population of all non-financial companies listed on the Indonesia Stock Exchange for three consecutive years that distributed cash dividends. It is known that the sample of this study is fifty companies. The results of this study indicate that there is no reciprocal influence between capital structure and dividend policy. In addition, factors that significantly influence capital structure are institutional ownership, liquidity, firm size and free cash flow while factors that significantly influence dividend policy are tangibility and firm size.

Keywords: capital structure, dividend policy, dividend payout ratio, institutional ownership, tangible assets, growth opportunity, liquidity, profitability, business risk, firm size, and free cash flow

Sources: http://repository.unair.ac.id/33601/