The Effect of Corporate Governance toward Dividend Payout Ratio

Abstract

Pupose: The existence of market uncertainty can increase agency problems that raise doubts about future cash flows, such as dividend payments. This study aims to analyze the effect of corporate governance such as the proportion of female commissioners, the proportion of female independent commissioners, the board size, board independence, board meeting, and audit committee size towards a dividend payout ratio.
 Method:The sample of this research is manufacturing sector companies listed on the Indonesia Stock Exchange (ISE) and the Thailand Stock Exchange (TSE). The company should have published financial reports that have been audited regularly during the study period, and the company has no negative retained earnings. This study uses a quantitative approach with two least square regression analysis models.
 Result: The observations on the ISE shows that the proportion of female independent commissioners and audit committee size has a significant positive effect on the dividend payout ratio. This result is because female commissioners can take control of minority shareholders by making larger payments and audit committee members can monitor more effectively and control opportunistic behavior. However, board independence and board meeting significantly adversely affect the dividend payout ratio, this is because more members of board independence and more frequent meetings can use dividends as a substitute role in reducing agency problems so that dividend payment will be below. The observations on the TSE shows that the proportion of female independent commissioners and board meetings significantly positively affects the dividend payout ratio. However, board independence has a significant adverse effect on the dividend payout ratio. This result is because board independence tends to reduce agency costs, so using dividends as a substitute role to reduce dividend payments.

The Relationship between Promoters’ Holdings, Institutional Holdings, Dividend Payout Ratio and Firm Value: The Firm Age and Size as Moderators

“…However, the boundary conditions as to how these holdings affect the firm value have received little attention from the researchers. On the contrary, dividend payout ratio has received increasing attention by researchers, primarily because of its potential effect on the firm value (Budagaga 2017;Damayanti and Palinggi 2023;Nurokhmah et al 2023;Setiyawati et al 2017;Tjipta et al 2022;Yang and Ma 2022). It is well documented that institutional holdings and dividend payout ratio play a significant role in increasing the firm value.…”