Status of Dividend Distribution

Oct 13, 2025 by talynt.org 85 views

Introduction

The quality of profit is a crucial aspect of a company's financial performance, and it has a significant impact on the decision-making process of investors and stakeholders. In recent years, there has been a growing interest in understanding the factors that influence the quality of profit, particularly in non-financial companies listed on the Indonesian Stock Exchange (IDX). This study aims to identify and test the factors that affect the quality of profit in non-financial companies listed on the IDX during 2016.

Methodology

This study uses data from the fact book published by the IDX, which provides information on various variables, including status of dividend distribution, operation and geographical diversification, as well as company ownership status. The profit quality is measured through the AAQ (abnormal accruals quality) proxy, which shows a negative relationship with the quality of the profit itself. In addition, five control variables were also analyzed, namely the prospect of external growth (PBV), debt structure (Lev), company maturity (AGE), competition level in industry (HHI), and volatility of operational cash flows (CFO).

Variables and Hypotheses

The variables used in this study are:

Status of Dividend Distribution: This variable measures whether a company distributes dividends to its shareholders or not.
Operation and Geographical Diversification: This variable measures the extent to which a company operates in different industries and geographies.
Company Ownership Status: This variable measures the ownership structure of a company, including the percentage of ownership held by institutional investors, individual investors, and the company's management.
Prospect of External Growth (PBV): This variable measures the company's growth prospects, including its market value-to-book value ratio.
Debt Structure (Lev): This variable measures the company's debt-to-equity ratio.
Company Maturity (AGE): This variable measures the company's age, including the number of years it has been in operation.
Competition Level in Industry (HHI): This variable measures the level of competition in the company's industry, including the Herfindahl-Hirschman Index (HHI).
Volatility of Operational Cash Flows (CFO): This variable measures the volatility of the company's operational cash flows.

The hypotheses tested in this study are:

H1: The status of dividend distribution has a significant negative effect on the quality of earnings proxied by AAQ.
H2: The operation and geographical diversification status has a significant positive influence on earnings quality.
H3: The ownership status of the company has a negative effect on earnings quality.
H4: The prospect of external growth (PBV) is positively related to earnings quality.
H5: Debt structure (Lev) has a varied impact depending on the management of the debt itself.
H6: The maturity of the company (AGE) and the level of competition in the industry (HHI) provide important insights on how external and internal factors interact in determining the quality of earnings.

Results

The results of this study show that:

The status of dividend distribution has a significant negative effect on the quality of earnings proxied by AAQ (H1).
The operation and geographical diversification status has a significant positive influence on earnings quality (H2).
The ownership status of the company does not have a significant negative effect on earnings quality (H3).
The prospect of external growth (PBV) is positively related to earnings quality (H4).
Debt structure (Lev) has a varied impact depending on the management of the debt itself (H5).
The maturity of the company (AGE) and the level of competition in the industry (HHI) provide important insights on how external and internal factors interact in determining the quality of earnings (H6).

Discussion

The results of this study provide important insights into the factors that affect the quality of profit in non-financial companies listed on the IDX. The findings suggest that companies that do not share dividends tend to have better profit quality, maybe because they are more focused on reinvestment and growth. Conversely, operating and geographical diversification status has been proven to have a significant positive influence on earnings quality. This study also failed to prove that the ownership status of the company has a negative effect on earnings quality.

Further analysis of the control variable shows that the prospect of external growth (PBV) is positively related to earnings quality, which shows that companies with better growth prospects tend to have higher profit quality. Debt structure (Lev) has a varied impact depending on the management of the debt itself, while the maturity of the company (AGE) and the level of competition in the industry (HHI) provides important insights on how external and internal factors interact in determining the quality of earnings.

Conclusion

In conclusion, dividends and diversification emerged as an important indicator for earnings quality. Thus, for investors and stakeholders, understanding these factors can be a useful tool in assessing the financial health and performance of a company. This study not only adds knowledge in the field of accounting and financial management but also provides practical guidelines for investors to make more information-based decisions.

Limitations

This study has several limitations, including:

The use of a single proxy for profit quality (AAQ).
The limited sample size of non-financial companies listed on the IDX.
The lack of control variables that capture the impact of external factors on earnings quality.

Future Research Directions

Future research directions include:

Investigating the impact of other factors on earnings quality, such as corporate governance and executive compensation.
Examining the relationship between earnings quality and other financial performance metrics, such as return on equity (ROE) and return on assets (ROA).
Conducting a longitudinal study to examine the changes in earnings quality over time.

References

[List of references cited in the study]

Appendix

[Appendix materials, including additional tables and figures]
Q&A: Factors Affecting Profit Quality in Non-Financial Companies ===========================================================

Introduction

In our previous article, we discussed the factors that affect profit quality in non-financial companies listed on the Indonesian Stock Exchange (IDX). In this article, we will answer some of the most frequently asked questions related to this topic.

Q: What is profit quality and why is it important?

A: Profit quality refers to the accuracy and reliability of a company's reported earnings. It is an important metric for investors and stakeholders as it helps them assess the financial health and performance of a company. A high-quality profit is one that is free from manipulation and is a true reflection of a company's financial performance.

Q: What are the factors that affect profit quality?

A: The factors that affect profit quality include:

Dividend distribution: Companies that do not share dividends tend to have better profit quality.
Operation and geographical diversification: Operating in different industries and geographies can provide access to various markets, reduce risk, and increase income stability.
Company ownership status: The ownership structure of a company can affect its profit quality.
Prospect of external growth (PBV): Companies with better growth prospects tend to have higher profit quality.
Debt structure (Lev): The management of debt can have a significant impact on profit quality.
Company maturity (AGE): The age of a company can affect its profit quality.
Competition level in industry (HHI): The level of competition in a company's industry can affect its profit quality.

Q: How can investors and stakeholders use this information?

A: Investors and stakeholders can use this information to assess the financial health and performance of a company. By understanding the factors that affect profit quality, they can make more informed decisions about investing in a company.

Q: What are the implications of this study for companies?

A: The findings of this study suggest that companies should focus on building a strong financial foundation, including a stable dividend policy, a diversified business model, and a well-managed debt structure. Companies should also prioritize transparency and accountability in their financial reporting.

Q: What are the limitations of this study?

A: This study has several limitations, including:

The use of a single proxy for profit quality (AAQ): The study relies on a single proxy for profit quality, which may not capture the full range of factors that affect profit quality.
The limited sample size of non-financial companies listed on the IDX: The study is limited to a sample of non-financial companies listed on the IDX, which may not be representative of all companies.
The lack of control variables that capture the impact of external factors on earnings quality: The study does not include control variables that capture the impact of external factors on earnings quality.

Q: What are the future research directions for this study?

A: Future research directions include:

Investigating the impact of other factors on earnings quality: Future studies can investigate the impact of other factors on earnings quality, such as corporate governance and executive compensation.
Examining the relationship between earnings quality and other financial performance metrics: Future studies can examine the relationship between earnings quality and other financial performance metrics, such as return on equity (ROE) and return on assets (ROA).
Conducting a longitudinal study to examine the changes in earnings quality over time: Future studies can conduct a longitudinal study to examine the changes in earnings quality over time.

Conclusion

In conclusion, this study provides valuable insights into the factors that affect profit quality in non-financial companies listed on the IDX. By understanding these factors, investors and stakeholders can make more informed decisions about investing in a company. Future research directions include investigating the impact of other factors on earnings quality, examining the relationship between earnings quality and other financial performance metrics, and conducting a longitudinal study to examine the changes in earnings quality over time.