Determinants of Dividend Policy of Family Firms in Indonesia

Abstract

This study aims to determine the effect of firm growth, leverage, profitability, institutional ownership, board size, and inflation variables on dividend policy. The object of this research is family firms classified as manufacturing firms on the Indonesia Stock Exchange (IDX) in 2017-2020. Selected by purposive random sampling technique, the study used 144 samples from 36 family firms that met the criteria. Panel data regression results showed that, partially, leverage has a negative and significant effect on dividend policy while profitability has a positive and significant effect. Furthermore, firm growth, inflation, institutional ownership, and board size have no significant effect on dividend policy. The implication is that if investors want to choose firms that pay out high dividends, they must choose firms with low leverage and high profitability. Firms must be able to try to have lower leverage and continue to generate high profits to be able to distribute dividends.