Agency Cost and Dividend Pay-out: A Study of Selected Listed Manufacturing Firms in Nigeria

Agency cost is an internal cost which arises between management (agent) and shareholder (principal), because of the diverging interest of the two parties. Dividend payments are often employed to mitigate this cost. Studies have examined the effect of dividend pay-outs on agency costs documenting mixed findings. However, the literature on the reverse effect of agency costs on dividend pay-outs is still nascent. The main objective of the study is to examine the effect of agency cost on dividend pay-out of listed manufacturing firms in Nigeria. The study used a panel research design. The population of the study comprised listed manufacturing firms, but delimited to firms in conglomerate and consumer goods sectors of the Nigerian Stock Exchange. Data for the study were collected from yearly financial statements of the selected firms. The hypotheses were tested using pooled OLS Regression. The dependent variable of the study was dividend pay-out, while assets to sales ratio, leverage, and free cash flow were proxies of agency cost. Firm size and profitability measures (ROA and ROE) were used as control variables in the study. The study found a significant and positive effect of assets to sales ratio and free cash flow, and a significant and negative effect of leverage on dividend pay-out. The study recommended amongst others that, managers should consider the implication of agency costs in the design of in the design and implementation of a dividend policy.

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Analyzing the Link Between Agency Problems, Governance and Control Attributes for Pakistan

e-Finanse ◽

10.1515/fiqf-2016-0029 ◽

2017 ◽

Vol 13 (3) ◽

pp. 43-65 ◽

Cited By ~ 1

Author(s):

Ahmad Ghazali ◽

Ahmad Raza Bilal

Keyword(s):

Corporate Governance ◽

Cash Flow ◽

Agency Costs ◽

Stock Exchange ◽

Agency Problems ◽

Agency Cost ◽

Free Cash Flow ◽

Listed Firms ◽

Utilization Ratio ◽

Sound Policy

AbstractThis research attempts to analyze the relationship between agency, control and corporate governance attributes for a sample of 267 firms listed on the Pakistan Stock Exchange (PSX) from 2005 to 2008. The results show that a) Pakistani listed firms are facing high agency costs problems in contrast to established markets. b) Factors are observed important to having strong effect on mitigating agency costs levels: corporate dividend policy, degree of board independence, and institutional ownership. c) Corporate governance factors reduce discretionary expenditure ratio, increase assets utilization ratio and free cash flow ratio. d) Control variables increases the asset utilization ratio and decreases the free cash flow and increases the managers’ performance (Tobin’s Q ratio). e) Ownership attributes regulate free cash flow and decrease the discretionary expenditure ratio. The outcomes of this research lead to the proposed use of recommended governance, control and ownership attributes to overcome agency problems and a sound policy for better corporate governance (better management of agency cost issues) for listed firms.

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INSIDER OWNERSHIP, FREE CASH FLOW, DAN PERTUMBUHAN TERHADAP DIVIDEND PAYOUT RATIO

Jurnal Riset Akuntansi Kontemporer - Vol 13 No 2 (2021): October Edition ◽

10.23969/jrak.v12i1.4040 ◽

2020 ◽

Vol 12 (1) ◽

pp. 7-14

Author(s):

Yessri Meiliyawati ◽

Ellen Rusliati

Keyword(s):

Cash Flow ◽

Stock Exchange ◽

Free Cash Flow ◽

Dividend Payout ◽

Insider Ownership ◽

Mining Companies ◽

Panel Data Regression ◽

Data Regression ◽

Negative Effect ◽

Positive Effect

Dividend alongside capital gain is a return for stock holder. The aim of this study is to determine the condition of insider ownership, free cash flow, growth and dividend payout ratio, and to determine their effect of insider ownership, free cash flow and growth simultaneously and partially on dividend payout ratio. The population were mining companies sector listed in Indonesia Stock Exchange in the period of 2010-2017. The sample of this study is amounted to 4 companies with the amount of observations were 32. The method used were descriptive and verificative using panel data regression. The results showed that simultaneously insider ownership, free cash flow and growth has significant effect on dividend payout ratio with contribution of effect 68.19%. Partially, insider ownership has a significant positive effect, free cash flow and growth have significant negative effect on dividend payout ratio.

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PENGARUH ARUS KAS BEBAS, HUTANG DAN LABA TERHADAP DIVIDEN PADA PERUSAHAAN MANUFAKTUR YANG TERCATAT DI BURSA EFEK INDONESIA TAHUN 2012-2014

Manajemen Bisnis ◽

10.22219/jmb.v6i1.5393 ◽

2018 ◽

Vol 6 (1) ◽

Author(s):

Lidya Ayu Purnamasari

Keyword(s):

Cash Flow ◽

Stock Exchange ◽

Free Cash Flow ◽

T Test ◽

Net Income ◽

Significant Positive Effect ◽

Manufacturing Companies ◽

F Test ◽

Negative Effect ◽

Positive Effect

The purpose of this research is to know and analyze the effect of variable free cash flow (FCF), debt (DAR) and earnings (EPS) of dividends (DPR), and determine which variables are most effect on the dividend. This type of research is explanatory research with quantitative approach and using multiple regression analysis with a sample of manufacturing companies listed in Indonesia Stock Exchange that cash dividends for three years, have complete data, and does not have a negative net income during the years 2012-2014. Based on the results of the research indicated that the variable free cash flow (FCF), debt (DAR) and earnings (EPS) significantly affects the dividend (DPR), which is reinforced by F test and t test. The results of the f test (simultaneous) indicate that third variable indepen (free cash flow, debt and profit) together affect dividends significantly. The results of the t test (partial) indicates that the variable free cash flow positive effect is not significantly to dividends. Variable debt negative effect is not significanly to dividend and variable profit significant positive effect on the dividend. The variables that most influence on dividends are variable profit.

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Permintaan Investor dan Karakteristik Keuangan terhadap Keputusan Pembayaran Dividen

Jurnal Akuntansi Maranatha ◽

10.28932/jam.v12i2.2528 ◽

2020 ◽

Vol 12 (2) ◽

pp. 327-336

Author(s):

Imelia Carolina Tedja ◽

Tarsisius Renald Suganda ◽

Fitri Oktariani

Keyword(s):

Cash Flow ◽

Financial Analysis ◽

Stock Exchange ◽

Negative Influence ◽

Free Cash Flow ◽

Manufacturing Companies ◽

Dividend Payment ◽

Dividend Payments ◽

Financial Characteristics ◽

Positive Effect

Dividend payment decision is an essential policy of companies to provide investors’ expectation of investment returns. This research is aimed to prove the catering theory of dividend and financial characteristics affecting corporate decisions in dividend payments. The study was conducted on a manufacturing company published on the Indonesia Stock Exchange (IDX). Analyzing the prediction of catering theory and financial analysis of companies in making dividend payments is conducted using the logistic regression method. This research is a quantitative research and moreover manufacturing companies as research sample were used from 2014 to 2018. Financial statements were obtained from the Indonesia Stock Exchange (IDX). The result of this study indicated that investors’ demand has positive effect on dividend payment decisions. Hence, companies consider catering in dividend payment decisions. While corporate financial characteristics such as free cash flow have positive effect on dividend payment decisions, profitability has no influence on dividend payment decisions and moreover, leverage has a negative influence on dividend payment decisions. Keywords: Catering Theory, Investor Demand, Free Cash Flow, Profitability, Leverage

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An Analysis of Agency Costs and Dividend Payout Ratio of Non-financial Companies

MIMBAR Jurnal Sosial dan Pembangunan ◽

10.29313/mimbar.v33i2.2267 ◽

2017 ◽

Vol 33 (2) ◽

pp. 259

Author(s):

Amy Natalia ◽

Retno Kusumastuti

Keyword(s):

Cash Flow ◽

Agency Costs ◽

Institutional Ownership ◽

Free Cash Flow ◽

Significant Positive Effect ◽

Dividend Payout ◽

Insider Ownership ◽

Independent Variables ◽

Negative Effect ◽

Positive Effect

This study aim to analyze the effect of Insider Ownership, Institutional Ownership, Dispersion of Ownership, Debt to Total Assets, Collateralizable Assets and Free Cash Flow on the Dividend Payout Ratio. These independent variables are proxies of agency costs. This study uses panel data of 90 non-financial companies in the period of 2009-2011. The findings indicate that (1) All independent variables (Insider Ownership, Institutional Ownership, Dispersion of Ownership, Debt to Total Assets, Collateralizable Assets and Free Cash Flow) have significant effect on the dependent variable (Dividend Payout Ratio) simultaneously; (2) Institutional Ownership and Collateralizable Assets have a significant positive effect on Dividend Payout Ratio; (3) Insider Ownership, Debt to Total Assets, and Dispersion of Ownership have a significant negative effect on Dividend Payout Ratio; (4) Free Cash Flow has no significant positive effect on Dividend Payout Ratio.

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PENGARUH FREE CASH FLOW, FINANCIAL DISTRESS, DAN INVESTMENT OPPORTUNITY SET TERHADAP MANAJEMEN LABA

Jurnal Akuntansi Bisnis ◽

10.30813/jab.v14i1.2458 ◽

2021 ◽

Vol 14 (1) ◽

Author(s):

Sally Irawan ◽

Prima Apriwenni

Keyword(s):

Earnings Management ◽

Cash Flow ◽

Financial Distress ◽

Stock Exchange ◽

Total Sample ◽

Free Cash Flow ◽

Investment Opportunity ◽

Purposive Sampling ◽

Investment Opportunity Set ◽

Positive Effect

ABSTRACT : Stakeholders pay attention to the earnings report, thus encouraging company managers to plan strategies to produce reports expected by stakeholders. Earnings management is one way that can be done. Managers can intervene the earnings management by increasing or decreasing profit in order to achieve a certain level of profit which benefits himself or the company. This study aims to determine the influence of free cash flow, financial distress, and investment opportunity set on earnings management. The research sample consisted of 11 infrastructure, utility, and transportation companies listed on the Indonesia Stock Exchange in 2014-2018 with the total sample of 55 data. This study used a purposive sampling method and was tested with SPSS 22.0 Software. The results show that the data have met the pooling test, classical assumptions and established criteria. The results of the F test show that the earnings management variable is affected simultaneously by free cash flow, financial distress, and investment opportunity set variables. The t test results show that the free cash flow and investment opportunity set have a significant positive effect on earnings management, whereas financial distress does not. In sum, there is enough evidence that free cash flow and investment opportunity set positively affect earnings management, but financial distress does not have enough evidence to influence earnings management.Keywords: Earnings Management, Free Cash Flow, Investment Opportunity Set, Financial Distress. ABSTRAK: Laporan laba menjadi perhatian para stakeholders sehingga mendorong manajer perusahaan melakukan perencanaan strategi untuk menghasilkan laporan yang diharapkan stakeholder. Manajemen laba adalah salah satu cara yang dapat dilakukan. Intervensi manajer untuk melakukan manajemen laba dengan cara menaikkan atau menurunkan laba guna mencapai tingkat laba tertentu untuk menguntungkan dirinya sendiri atau perusahaan. Penelitian ini bertujuan untuk mengetahui pengaruh free cash flow, financial distress, dan investment opportunity set terhadap manajemen laba. Sampel penelitian ini adalah perusahaan infrastruktur, utilitas, dan transportasi yang terdaftar di Bursa Efek Indonesia periode 2014-2018. Total sampel yang digunakan adalah 11 perusahaan dengan data observasi yang diperoleh sebanyak 55. Teknik pengambilan sampel yang digunakan adalah non-probability sampling dengan menggunakan metode purposive sampling dan pengujian yang dilakukan dengan bantuan software SPSS 22.0. Hasil penelitian dari data yang digunakan, untuk uji pooling dan asumsi klasik telah lulus uji dan sudah memenuhi kriteria yang ditetapkan. Hasil uji F menunjukkan bahwa variable manajemen laba dipengaruhi secara simultan oleh variable free cash flow, financial distress, dan investment opportunity set. Dari hasil uji t memperlihatkan hasil bahwa free cash flow dan investment opportunity set mempunyai nilai signifikan positif terhadap manajemen laba, tapi untuk financial distress tidak mempunyai nilai signifikan terhadap manajemen laba. Kesimpulan dari penelitian ini adalah free cash flow dan investment opportunity set berpengaruh positif terhadap manajemen laba, sedangkan financial distress tidak berpengaruh terhadap manajemen laba.Kata Kunci: Manajemen Laba, Free Cash Flow, Investment Opportunity Set, Financial Distress

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Free cash flow, investment inefficiency, and earnings management: evidence from manufacturing firms listed on the Indonesia Stock Exchange

Investment Management and Financial Innovations ◽

10.21511/imfi.15(1).2018.25 ◽

2018 ◽

Vol 15 (1) ◽

pp. 299-310 ◽

Cited By ~ 1

Author(s):

Zaki Fakhroni ◽

Imam Ghozali ◽

Puji Harto ◽

Etna Nur Afri Yuyetta

Keyword(s):

Earnings Management ◽

Cash Flow ◽

Structural Equation ◽

Stock Exchange ◽

Manufacturing Firms ◽

Free Cash Flow ◽

Path Model ◽

Equation Modeling ◽

Fixed Assets ◽

The Relationship

The study aims to test investment inefficiency of fixed assets in mediating the relationship between free cash flow and earnings management and to test the controlling shareholders in moderating the relationship between free cash flow and fixed assets investment inefficiency. The research problem proposed in this study is whether the use of free cash flow for the investment inefficiency of fixed assets is able to ultimately improve the managerial performance. This research investigates new empirical evidence related to management earnings practices caused by free cash flow fixed assets investment inefficiency. The study was conducted on all the manufacturing firms listed on the Indonesia stock exchange from 2010 to 2015. The data used are secondary data in the form of the firms’ financial statements. Using purposive sampling, 314 units were analyzed from 69 manufacturing firms. The estimation of the path model was completed using Structural Equation Modeling (SEM) by WarpPLS program version 5.0. The results showed that free cash flow is positively related to earnings management. Fixed assets investment inefficiency is able to mediate the relationship between free cash flow and earnings management.

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PERAN PROFITABILITAS DALAM MEMODERASI PENGARUH FREE CASH FLOW TERHADAP KEBIJAKAN DIVIDEN DI INDONESIA

10.31227/osf.io/5c8b4 ◽

2019 ◽

Author(s):

Angga Dwi Putra ◽

Irdha Yusra

Keyword(s):

Cash Flow ◽

Dividend Policy ◽

Stock Exchange ◽

Free Cash Flow ◽

Least Square ◽

Sample Collection ◽

Moderating Variables ◽

Ordinary Least Square ◽

Negative Effect ◽

Operational Activity

Basically, every company requires capital in order to finance their operational activity and to expand their business so capital becomes one of the important elements in a company. When the capital which is owned by the company is large the operational activity that can be conducted is large as well. This research is meant to test the influence of free cash flow on dividend policy with profitability as a moderating variable. The population is all companies which are listed in Indonesia Stock Exchange in 2013-2017 periods. The sample collection technique has been carried out by using purposive sampling method and based on the predetermined criteria, 26 companies have been selected as samples. The data of the financial statement of the companies has been obtained from the official website of IDX. The analytical method used is regression analysis with moderating variables using the SPSS application. Preliminary tests were carried out namely testing the classical assumptions to assess whether in an ordinary least square linear regression model there is a problem of classical assumptions, and testing to see the effect of moderation in influencing the relationship between independent variables and the dependent variable. The results of this observation state that free cash flow has a negative effect on dividend policy, free cash flow has a positive effect on dividend policy with profitability as a moderating variable

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PENGARUH FREE CASH FLOW, PERTUMBUHAN PERUSAHAAN, RETURN ON ASSETS, CASH RATIO, DEBT TO EQUITY RATIO DAN FIRM SIZE TERHADAP KEBIJAKAN DIVIDEN (Studi Empiris pada Perusahaan Sektor Industri Barang Konsumsi yang Terdaftar di Bursa Efek Indonesia Periode 2015

Jurnal ULTIMA Accounting ◽

10.31937/akuntansi.v12i1.1570 ◽

2020 ◽

Vol 12 (1) ◽

pp. 44-67

Author(s):

Elisa Tjhoa

Keyword(s):

Cash Flow ◽

Firm Size ◽

Stock Exchange ◽

Secondary Data ◽

Free Cash Flow ◽

Return On Assets ◽

Dividend Payout ◽

Regression Methods ◽

Negative Effect ◽

Equity Ratio

Abstract- The company’s decision on the distribution of dividend, as one of the returns expected by investors aside of capital gain, is an important decision due to its impacts on company’s value and shareholders’ wealth. The purpose of this research is to obtain empirical evidence regarding the determinants on Dividend Payout Ratio, namely Free Cash Flow, Company’s Growth, Return on Assets, Cash Ratio, Debt to Equity Ratio, and Firm Size (Empirical Study on Consumption Goods Industry Companies Listed on Indonesia Stock Exchange between 2015-2017). The samples in this study were selected through purposive sampling method and secondary data were analyzed through multiple linear regression methods. In total, 13 companies were used as samples. The result of this study showed Free Cash Flow, Cash Ratio and Firm Size partially have significant and positive effect towards Dividend Payout Ratio, and Company’s Growth has significant and negative effect towards Dividend Payout Ratio. While Return on Assets and Debt to Equity Ratio has no significant effects toward Dividend Payout Ratio. Free Cash Flow, Company’s Growth, Return on Assets, Cash Ratio, Debt to Equity Ratio and Firm Size simultaneously have significant effect toward Dividend Payout Ratio (DPR). Keywords: Cash Ratio, Debt to Equity Ratio, Dividend Payout Ratio, Firm Size, Free Cash Flow, Growth, Return on Assets

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Pengaruh Free cash flow, Kepemilikan Institusional, Profitabilitas dan Leverage Tehadap Kebijakan Dividen Tunai Pada Perusahaan Property dan Real estate yang Terdaftar di Bursa Efek Indonesia

Akuisisi: Jurnal Akuntansi ◽

10.24127/akuisisi.v15i2.429 ◽

2020 ◽

Vol 15 (2) ◽

pp. 26-34

Author(s):

Syelly Wulandari ◽

Nita Priska Ambarita ◽

Mia Dwi Puji Wahyuni Darsono

Keyword(s):

Real Estate ◽

Cash Flow ◽

Dividend Policy ◽

Stock Exchange ◽

Predictive Ability ◽

Institutional Ownership ◽

Free Cash Flow ◽

Return On Assets ◽

Equity Ratio ◽

Positive Effect

This research aims to examine and analyze the effect of free cash flow, institutional ownership, profitability and Leverage on dividend policy by using an approach multiple regression model. The proxies used to measure the financial elements are free cash flow, institutional ownership, Return on Assets and debt to equity ratio. The population in this research is property and real estate companies listed in Indonesia Stock Exchange for six years (2014-2019). Election sample procedure uses purposive sampling and the result are existed 5 companies that fulfill criteria so that amount of data studied by 30 data. The results of this research show that free cash flow, institutional ownership and profitability have a significant effect on dividend policy proxied by Dividend payout ratio. Leverage which is measured by debt to equity ratio hasn’t a significant effect on dividend policy. Free cash flow has a positive effect on dividend policy. Institutional ownership has a positive effect on dividend policy. Profitability which is measured by Return on Assets has a negative effect on dividend policy. The predictive ability of these variabel on dividend policy is 49,6% as shown by the amount of R square, while 50,4% is affected by the other factor which is not included in the research model.

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