DETERMINANTS OF DIVIDEND PAYOUT RATIO: A STUDY OF LISTED COMPANIES IN INDONESIA STOCK EXCHANGE

Abstract

This study examines the performance of the determinants of dividend payout ratio of listed companies in Indonesia Stock Exchang period 2011-2016. This study use independent variable such as firm size, institutional shareholding, free cash flow, growth and return on asset.

The analysis is performed using the data derived from the financial statements of listed companies in Indonesia Stock Exchange during a six-year period. The Panel Data Analysis is used to estimate the regression equation.

The result shows that there is relationship between firm size, institutional shareholding, free cash flow, growth and return on asset with dividend payout ratio which simultaneously have significant relationship with dividend payout ratio and the value is 54.93%.

The result of this research also shows that institutional shareholding has a positive and significant relationship with dividend payout ratio. Firm size and return on asset have a negative and significant relationship with dividend payout ratio. While the free cash flow has a negative and insignificant relationship with dividend payout ratio and growth has a positive and insignificant relationship with dividend payout ratio.