The Effect of Retained Earnings on Dividend Policy from the Perspective of Life Cycle

DOI

10.2991/iclick-18.2019.44How to use a DOI?

Keywords

Retained Earnings; Dividend; Company’s Life Cycle

Abstract

The dividend distributed by the company to the shareholders is very different when it is viewed from the standpoint of the company's life cycle. Companies in the established phase have a higher chance to pay dividends than companies in the decline stage. This is relevant to the company's life cycle theory. This study aimed to examine the effect of the retained earnings ratio on the probability and the level of dividend payout based on the life cycle of the company. The selected research objects were companies listed on the Indonesia Stock Exchange during period 2012-2015. Samples of this research were taken by using purposive sampling method. The analysis methods applied in this research were probit regression and tobit regression. The results confirmed that retained earnings that were chopped with retained earnings to total equity had a positive and significant effect on the probability of the company paying dividend and dividend payment rate. However, the results of the study did not show significant evidence that retained earnings havd a stronger effect on the probability and firm level of paying dividends.

Copyright

© 2019, the Authors. Published by Atlantis Press.

Open Access

This is an open access article distributed under the CC BY-NC license (http://creativecommons.org/licenses/by-nc/4.0/).

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TY  - CONF
AU  - Irdha Yusra
AU  - Rizka Hadya
AU  - Rhini Fatmasari
PY  - 2019/07
DA  - 2019/07
TI  - The Effect of Retained Earnings on Dividend Policy from the Perspective of Life Cycle
BT  - Proceedings of the 1st International Conference on Life, Innovation, Change and Knowledge (ICLICK 2018)
PB  - Atlantis Press
SP  - 216
EP  - 220
SN  - 2352-5398
UR  - https://doi.org/10.2991/iclick-18.2019.44
DO  - 10.2991/iclick-18.2019.44
ID  - Yusra2019/07
ER  -