Research Article
The Effect of Corporate Governance on Dividend Policy and Firm Size as Moderating in Jakarta Islamic Index
@INPROCEEDINGS{10.4108/eai.27-7-2021.2316922, author={Muhamad Farizd Fajdy and Muhamad Umar Mai}, title={The Effect of Corporate Governance on Dividend Policy and Firm Size as Moderating in Jakarta Islamic Index }, proceedings={Proceedings of the 4th International Conference on Economics, Business and Economic Education Science, ICE-BEES 2021, 27-28 July 2021, Semarang, Indonesia}, publisher={EAI}, proceedings_a={ICE-BEES}, year={2022}, month={3}, keywords={dividend payout ratio institutional ownership board of directors independent board of commissioners firm size}, doi={10.4108/eai.27-7-2021.2316922} }- Muhamad Farizd Fajdy
Muhamad Umar Mai
Year: 2022
The Effect of Corporate Governance on Dividend Policy and Firm Size as Moderating in Jakarta Islamic Index
ICE-BEES
EAI
DOI: 10.4108/eai.27-7-2021.2316922
Abstract
A firm exists because it has the purpose that is to maximize the investors’ welfare and dividend payments are one of the ways that companies do to achieve this purpose. The consistency and size of the dividend payout ratio is a crucial thing to be considered by the company’s management because it is one of the determining factors for investors in investing their funds in the company. The objective of this study was to determine the moderation of firm size on the effect of corporate governance on dividend policy. Corporate governance is proxied by the size of the Board of Directors, Institutional Ownership, and Independent Board of Commissioners variables. The population in this study is all companies listed at Jakarta Islamic Index (JII) from 2010-2019. The sample is determined using a purposive sampling technique with the criteria of companies paying dividends. The method of data analysis in this study used the Partial Least Squares – Structural Equation Modeling (PLS-SEM). The results found that firm size moderated negatively on the effect of the Independent Board of Commissioners on the Dividend Payout Ratio. Furthermore, the results showed that Institutional Ownership directly had a positive effect on the Dividend Payout Ratio. While the Independent Board of Commissioners had a direct negative effect on the Dividend Payout Ratio.