Dividend Policy on Companies Listed In Indonesia Stock Exchange.

I INTRODUCTION

The dividend policy is a financial decision that concern to the proportion of the firm’s earning
to be paid out to the shareholders. Here, a firm decides on the portion of revenue that is to be
distributed to the shareholders as dividends or to be ploughed back into the firm. Dividends are
paid out of a company’s profits based on specific shareholding. The payout of dividends is
influenced first by regulations but also by management decisions regarding to the sort of a
dividend policy.
The mining sector is the backbone of economic development in Indonesia, because of its
role as provider of energy resources. In recent years, the mining sector in Indonesia is experiencing
weakening caused by the fluctuation in the price of coal, crude oil, energy and metals. The
phenomenon of the decline in the stock price index of industrial mining sector may indicate that the
stock returns in the form of dividends received by investors from the industry is not yet optimal.
This decline makes the confidence of market participants decline with the further sustainability of
the coal price (Inggit, H 2017)
The dividend sharing decision is influenced by many variables that can influence
investors doing the investment, such as the research conducted by Megawati (2013) by using mining
companies as research objects. From the research that has been done, the results obtained are not
accurate because it uses several variables and a fairly short period. In addition to be influenced by
company-microeconomic factors, the dividend policy is also influenced by macroeconomic factors
such as interest rates, exchange rate, industrial production index and the stock price index of mining
sector (Binastuti (2012), Kaimba (2010), Basse and Reddeman (2011) and Siregar (2014). It means
that the significant factors that determine dividend policy are an important contribution in the
process of decision-making regarding dividends (Damodaran 2007). However, despite the decades
of research, the basic determinants of dividend policy remain somewhat controversial (Booth &
Zhou 2017).
From the explanation above, this study conducted a study of the factors affecting dividend
policy in the mining sector in 2015-2019. reported from Kontan.coi.d, in 2019 the mining sector
experienced a drastic decline with negative growth of 12.83%.
The factors that influence the dividend policy are the microeconomics factors such as current
ratio, debt to equity ratio, return on assets, and macroeconomic factors such as the Investment credit
interest rate, exchange rate, mining stock pricing index, and industrial production index.

This paper is organized as follow: section 2 describes the literature review. Section 3 discusses the
hypothesis tested in the study.
Ingrit, Siregar, H., & Syarifuddin, F. (2017). Factors Influencing Dividend Policy on Mining
Companies Listed In Indonesia Stock Exchange 2011-2015. International Journal of
Administrative Science & Organization, 24(2).

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