IMPACT OF COVID-19 PANDEMIC ON DIVIDEND POLICY: CASE OF INDONESIA

• Main Author: Johanna Susilo, Jennifer
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/57755
• Institution: Institut Teknologi Bandung

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.