IMPACT OF COVID-19 PANDEMIC ON DIVIDEND POLICY: CASE OF INDONESIA
The COVID-19 pandemic has dramatically impacted the whole world and many firms in Indonesia. Indonesian public companies faced significant challenges in which they should respond with immediate actions to survive. During the hard economy times, firms experienced declines in revenue, however on th...
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| Format: | Final Project |
| Language: | Indonesia |
| Online Access: | https://digilib.itb.ac.id/gdl/view/57755 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | The COVID-19 pandemic has dramatically impacted the whole world and many firms in
Indonesia. Indonesian public companies faced significant challenges in which they should respond
with immediate actions to survive. During the hard economy times, firms experienced declines in
revenue, however on the other side, the companies still need to maintain shareholder’s trust by
paying dividends regularly. Corporate governance plays an important role in the company, to ensure
there is no managers expropriation and protecting the investors rights. For this research, the writer
want to analyze the impact of corporate governance to dividend policy, as the firm behavior before
and after the pandemic is quite interesting to be researched whether company with good corporate
governance still maintain the regular dividend payment although they need immediate source of
funds to deal with internal situation of the company. The hypothesis for this research is firm with
high corporate governance practices will continue to pay high dividends to the shareholders
although the company cashflows maybe in trouble. The average dividend payment during pandemic
situation decreased in comparison with the prior year. Independent variables tested to measure
corporate governance is board size, meeting frequency, independence of the board, CEO duality,
existence of audit, nomination and remuneration committee. With time series being concerned of
FY 2016-2020, the writer used panel regression method with generalized least squares (GLS). The
overall evidence showed that companies having better corporate governance score tend to pay
higher dividends, both on general condition and pandemic condition. Other determinants of
dividend policy that may impact dividend policy is profitability, leverage, growth and firm size
have the expected impacts on dividend policy. |
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