The Characteristics of Dividend Payers from Banking Sectors in Indonesia

Abstract

When banking industries turn their organization into public ownership in market stock exchange, then they seems have liabilities to pay dividends for their shareholders and to increase these shareholder’s wealth. But to take decision for dividend policy most of industries must rely it on their financial performance. The objective of this study is to analyze the characteristics of dividend payers specially in banking sector. Conducting binary logistic regression, this study finds, The entities in banking sector with higher dividend average are more profitable than entities with lower dividend average and depend on its profit to pay dividends for their shareholders. Also, these entities tend more mature, larger, and have higher debt ratio relative to entities with lower dividend average.

Keywords: Dividend, debt ratio, profitability, retained earnings to equity ratio, size