Free Cash Flow, Dividend Policy, Investment Opportunity Set, Opportunistic Behavior and Firm's Value: (A Study About Agency Theory)

Giriati,

doi:10.1016/j.sbspro.2016.05.013

Cited by 34 publications

(39 citation statements)

References 35 publications

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“…H 1 : dividend policy has a positive effect on company performance in the following year Investment Opportunity Set (IOS) is an investment decision in the form of a combination of assets held (assets in place) and future investment options (Myers, 1977). According to Giriati (2016), IOS is the relationship between current spending and future spending with value/return/ prospect Dividend policy, investment opportunity set, free cash flow, and company performance: Indonesian's agricultural sector Choiri Chosiah, Budi Purwanto, Wita Juwita Ermawati | 407 | as a result of investment decisions to produce value for the company. Pratiwi (2016) proved that IOS has a positive influence on the company's fundamental performance as measured by the company's profitability ratio, where companies that have significant growth opportunities as measured by the value of IOS will also produce high profits.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

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Dividend policy, investment opportunity set, free cash flow, and company performance: Indonesian’s agricultural sector

Chosiah

Purwanto

Ermawati

2019

Jurnal Keuangan Dan Perbankan

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Dividends are a tool that can be an essential source of information for investors or other stakeholders as it contains information that can provide a signal about the company's prospects (dividend signaling theory). This study aims to examine the effect of dividend policy on company performance through moderation of investment opportunity set (IOS) and free cash flow (FCF) and examine the effect of the application of corporate governance on dividend policy and company performance. Based on purposive sampling technique obtained a sample of 71 companies that meet the criteria. The study was conducted using panel data regression method. The results showed that dividend policy had a significant negative effect on company performance in the following year. IOS has a positive and insignificant effect on company performance, while FCF has a positive and significant effect on company performance. IOS variable is able to moderate the relationship of dividend policy on company performance in the following year, while FCF is not able to moderate the influence of dividend policy on company performance in the following year. In addition, the corporate governance mechanism has an insignificant effect on dividend policy which shows that the corporate governance mechanism is still not effective in increasing the number of dividends paid to shareholders. AbstrakDividen adalah alat yang dapat menjadi sumber informasi penting bagi investor atau pemangku kepentingan lain karena berisi informasi yang dapat memberikan sinyal tentang prospek perusahaan (teori pensinyalan dividen). Penelitian ini bertujuan untuk menguji pengaruh kebijakan dividen terhadap kinerja perusahaan melalui moderasi set kesempatan investasi (IOS) dan arus kas bebas (FCF) dan menguji pengaruh penerapan tata kelola perusahaan terhadap kebijakan dividen dan kinerja perusahaan. Berdasarkan teknik purposive sampling diperoleh sampel sebanyak 71 perusahaan yang memenuhi kriteria. Penelitian dilakukan dengan menggunakan metode regresi data panel. Hasil penelitian menunjukkan bahwa kebijakan dividen memiliki pengaruh negatif yang signifikan terhadap kinerja perusahaan pada tahun berikutnya. IOS memiliki efek positif dan tidak signifikan pada kinerja perusahaan, sedangkan FCF memiliki efek positif dan signifikan terhadap kinerja perusahaan. Variabel IOS mampu memoderasi hubungan kebijakan dividen dengan kinerja perusahaan di tahun berikutnya, sedangkan FCF tidak mampu memoderasi pengaruh kebijakan dividen terhadap kinerja perusahaan di tahun berikutnya. Selain itu, mekanisme tata kelola perusahaan memiliki pengaruh yang tidak signifikan terhadap kebijakan dividen yang menunjukkan bahwa mekanisme tata kelola perusahaan masih belum efektif dalam meningkatkan jumlah dividen yang dibayarkan kepada pemegang saham.

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Section: Hypotheses Developmentmentioning

confidence: 99%

“…Free cash flow is one of the causes of agency problems in companies (Jensen, 1986;Giriati, 2016). The agency problem is a conflict that arises in the relationship between the owner (principals) and the manager (agent).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

Dividend policy, investment opportunity set, free cash flow, and company performance: Indonesian’s agricultural sector

Chosiah

Purwanto

Ermawati

2019

Jurnal Keuangan Dan Perbankan

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“…Here is a table of variables to form an IOS proxy: (Abbott, 2001;Adam & Goyal, 2003;Alnajjar & Riahi-belkaoui, 2001;Anam, Arfan, & Shabri, 2016;Baker, 1993;Cahan & Hossain, 1996;S. S. Chen, Chung, & Chung, 2001;Nisa et al, 2017;Fama & French, 2015;Giriati, 2016;Gul & Kealey, 1999;Ho et al, 2004;Jones & Sharma, 2001;Kallapur & Trombley, 1999 & Hossain, 1996;Chung & Charoenwong, 1991;Gaver & Gaver, 1993, 1995Gul & Kealey, 1999;Hartono, 1999;Hossain, Cahan, & Adams, 2000;Jones & Sharma, 2001;Kallapur & Trombley, 1999;Pratiwi dan Dewi, 2012;Rosdini, 2011;Sami, Heibatollah & Lam, 1999;Skinner, 1993;Smith & Watts, 1992;Yusuf dan Firdauz, 2005;Akhtaruddin & Hossian, 2008;Khanqah et al,, 2013) (Chung & Charoenwong, 1991;Kallapur & Trombley, 1999;Narayanan & Uzmanoglu, 2018;Skinner, 1993;Yusuf & Firdauz, 2005;Ardestani et al, 2013b) The institutional ownership variable as a dummy is represented by numbers 0 and 1. Number 0 indicates that the company does not have any institutional ownership while number 1 indicates that the company has ...…”

Section: Operational Definitionmentioning

confidence: 99%

Investment opportunity set, institutional ownership, family ownership and funding policy

Hikmah¹,

Haryono²,

Djuminah³

et al. 2019

10.5267/j.msl

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This study aims to examine and analyze the effect of the Investment Opportunity Set (IOS) on the corporation funding policies and also finds out whether or not the institutional ownership moderates the role of family ownership on IOS and company funding policies. The population includes all gopublic companies listed on the IDX over the period 2008-2016. The sampling technique used was purposive sampling method. The processing data used regression equations with panel data models and Eviews analysis tools. The results show that IOS had a negative effect on the funding policies. This makes the company with a lower debt to equity ratio on its capital structure policy to use the equity financing to reduce the agency problems. Institutional ownership moderates the influence of IOS on the funding policies. This proves that the institutional ownership balances need to replace the role of debt in monitoring the managers and reducing the agency problems in the company. The family ownership does not moderate the influence of IOS on the funding policies because in the ownership, the family tends to take opportunities for the personal interests and form a weak ownership structure so that the agency problems rises and disrupts the company performance.

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“…Kwangmin Park & SooCheong (Shawn) Jang conducted an integrated analysis of the relationship among capital structure, diversification, corporate performance and free cash flow [3]. Giriati revealed that there was a significant positive correlation between free cash flow and dividend payout rate [4]. Xin Chen et al studied the relationship among free cash flow, corporate governance and over-investment in Chinese listed companies, and showed that the greater the free cash flow, the more serious the over-investment phenomenon [5].…”

Section: Introductionmentioning

confidence: 99%

Empirical Analysis of Cash Dividend Capability of China's Listed Home Appliance Companies based on Free Cash Flow

Yuan¹,

Zhao²

2019

Proceedings of the 2018 International Symposium on Social Science and Management Innovation (SSMI 2018)

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Stock Price of GREE Electric Appliance, Inc. fell sharply without cash dividends distributed in GREE annual report on April 25, 2018. Based on fee cash flow and surplus free cash flow, this paper presents the evaluation criteria of dividend capability. Using the detailed data of sampled China's listed home appliance companies, free cash flows, surplus free cash flows, and their cumulative values are computed. The capabilities of cash dividends are judged and comparatively analyzed. The results show that white goods companies have the best capabilities of cash dividends. Especially, the GREE's cash dividend capability is investigated based on free cash flow. The results reveal that GREE has good cash dividend capability without diversified development. The forced dividends under CSRC leads to "Ponzi dividends", and discourage from the promotion of core competitiveness and the development of listed companies to a certain extent.

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Free Cash Flow, Dividend Policy, Investment Opportunity Set, Opportunistic Behavior and Firm's Value: (A Study About Agency Theory)

Cited by 34 publications

References 35 publications

Dividend policy, investment opportunity set, free cash flow, and company performance: Indonesian’s agricultural sector

Dividend policy, investment opportunity set, free cash flow, and company performance: Indonesian’s agricultural sector

Investment opportunity set, institutional ownership, family ownership and funding policy

Empirical Analysis of Cash Dividend Capability of China's Listed Home Appliance Companies based on Free Cash Flow

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