Determining Factors of Dividend Policy in Indonesia

    Eka Bertuah ,Dede Maskat Baherans ,Sinta Aria Dewi Siskawati ,Eddy Winarso
    Keywords: Dividend Policy, Financial Ratios, Signaling Theory, Life Cycle Theory. ,


    The purpose of this study was to find out financial ratios that could be the determinant factors of dividend
    policy in manufacturing companies listed on the Indonesia Stock Exchange during the period 2015 to
    2017. Purposive sampling was used in sampling techniques with the acquisition of 118 companies as
    research samples. The data analysis technique used in this study is the discriminant test with the
    Mahalanobis Stepwise method. The results of this study indicate that ROA, NPM, Firm Size, and Current
    Ratio can distinguish significantly between companies that distribute dividends with companies that do
    not distribute dividends. Those four ratios are ranked according to their discriminative power. ROA came
    out as strongest factor, followed by NPM, Firm Size. While Current Ratio is the weakest factor. The higher
    those four financial ratios, the more likely a company is distributing dividends. The classification results also
    show that 41 companies tend to distribute dividends, 55 companies tend not to distribute dividends, 22
    other tendencies are not determined. This study provides evidence that manufacturing companies in
    Indonesia are more following what is hypothesized by signaling theory and life cycle theory.

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