The Effect of Leverage and Profitability on Firm Decision to Pay Dividends

Surbakti, Evi Yanti S. and Hernadi, Keni C. and Sudibyo, Manasye H. and Hadianto, Bram (2019) The Effect of Leverage and Profitability on Firm Decision to Pay Dividends. Asian Journal of Management Sciences & Education, 8 (4). pp. 126-134. ISSN 2186-845X

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Abstract

The dividend becomes an issue not only for creditors but also for public investors. If the firms pay dividends, creditors suspect that debt firms get is used to be paid as dividends. If the firms do not pay dividends, public investors suspect that controlling shareholders use profits to fulfill their interests. To make this condition clear, this research uses the leverage and profitability to be related to dividends. Therefore, this research intends to examine and analyze the effect of leverage and profitability on the firm decision to do it. The population of the firms is from the food and beverage sector listed on the Indonesia Stock Exchange between 2010 and 2017. Moreover, the samples are chosen from the population by a simple random sampling method. The logistic regression model with pooled data is utilized as the method of data analysis. The research infers that debt policy owns a negative effect on the firm probability to pay dividends. Conversely, profitability owns a positive effect on this probability. It also means two things. Firstly, the firms do not pay dividends from debt they get so that the conflict between firms and their creditors does not happen. Secondly, paying the dividends means the public shareholders get the same portion of the profit as controlling shareholders get so that no conflict between them happens.

Item Type:	Article
Contributors:	Contribution Contributors NIDN/NIDK Email UNSPECIFIED Surbakti, Evi Yanti S. UNSPECIFIED UNSPECIFIED UNSPECIFIED Hernadi, Keni C. UNSPECIFIED UNSPECIFIED UNSPECIFIED Sudibyo, Manasye H. UNSPECIFIED UNSPECIFIED UNSPECIFIED Hadianto, Bram UNSPECIFIED UNSPECIFIED
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Depositing User:	Perpustakaan Maranatha
Date Deposited:	11 Feb 2023 01:42
Last Modified:	24 Feb 2023 07:26
URI:	http://repository.maranatha.edu/id/eprint/31367

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