To read the full version of this content please select one of the options below:

Dividend policy in Indonesia: survey evidence from executives

H. Kent Baker (University Professor of Finance and Kogod Research Professor at Kogod School of Business, American University, Washington DC, USA)
Gary E. Powell (McColl School of Business, Queens University of Charlotte, North Carolina, USA)

Journal of Asia Business Studies

ISSN: 1558-7894

Article publication date: 13 January 2012



This study aims to survey managers of dividend‐paying firms listed on the Indonesian Stock Exchange (IDX) to learn their views about the factors influencing dividend policy, dividend issues, and explanations for paying dividends. The study also aims to focus on Indonesia, the largest national economy in Southeast Asia, because relatively few studies examine why Indonesian firms pay dividends.


The primary means of gathering data is a mail survey. The two‐page survey instrument consists of three main sections: 22 factors for determining a firm's dividend policy; six questions that provide background information about the respondents and their firms; and 27 statements about dividend policy in general. Of the 163 firms surveyed, 52 firms responded, resulting in a response rate of 31.9 per cent.


The evidence shows that managers view the most important determinants of dividends as the stability of earnings and the level of current and expected future earnings. They also believe that the effects of dividends on stock prices and needs of current shareholders are important determinants. The evidence shows that managers of Indonesian firms perceive that dividend policy affects firm value. Managers seem to agree that multiple theories including signaling, catering, and life cycle explanations help to explain why their firms pay dividends.

Research limitations/implications

The study focuses on a limited number of factors and issues involving dividend policy. While non‐response bias could potentially limit making generalizations to the population of IDX firms, statistical tests show no significant differences between respondents and non‐respondents on various firm characteristics.

Practical implications

The evidence suggests that no universal set of factors is likely to be applicable to all firms when setting dividend policy.


This study presents new evidence on the perceptions of managers of dividend‐paying IDX‐listed firms about the factors influencing dividend policy, dividend issues, and explanations for paying dividends.



Kent Baker, H. and Powell, G.E. (2012), "Dividend policy in Indonesia: survey evidence from executives", Journal of Asia Business Studies, Vol. 6 No. 1, pp. 79-92.



Emerald Group Publishing Limited

Copyright © 2012, Emerald Group Publishing Limited