The Effect of Dividend Policy, Profitability, and Leverage on Share Price Volatility of Service Sector Companies on the Indonesia Stock Exchange During 2015-2019

Fiorenza, Shieryn and Wijaya, Liliana Inggrit and Sutejo, Bertha Silvia (2022) The Effect of Dividend Policy, Profitability, and Leverage on Share Price Volatility of Service Sector Companies on the Indonesia Stock Exchange During 2015-2019. In: Proceedings of the 19th International Symposium on Management (INSYMA 2022), 19-20th May 2022, The Patra Hotel and Resort, Kuta-Bali.

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Abstract

This study aims to analyze the effect of dividend payout ratio, dividend yield, earning volatility, and debt to equity ratio on share price volatility in service sector companies listed on the Indonesia Stock Exchange during the 2015-2019 period. This study uses a quantitative approach with multiple linear regression modality. The findings of this study indicate that observations on the Indonesia Stock Exchange found that the dividend payout ratio has a significant positive effect on share price volatility. This is because the higher the dividend yield, or the more companies paying dividends each year, the more volatile the company's stock price will be because the demand for the company's shares increases (Christina, 2019). However, dividend yield has no significant negative effect on share price volatility because investors prefer capital gains compared to dividends because the tax imposed on dividends is higher. Then earning volatility has a significant positive effect. This is because traditionally, profit has been used as an indicator to measure the company's financial performance (Maditinos et al., 2006). Companies with stable earnings are less likely to mess with the market with earnings announcements that will surprise investors. Debt to equity ratio also has an insignificant positive effect on share price volatility. This is because the company's decision to use debt can be considered for the purpose of saving tax on loan interest payments and financial distress costs caused by the accumulation of company debt in accordance with the trade-off theory.

Item Type:	Conference or Workshop Item (Paper)
Uncontrolled Keywords:	Share Price Volatility, Dividend Payout Ratio, Dividend Yield, Return On Equity, Debt to Equity Ratio
Subjects:	H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions:	Faculty of Business and Economic > Department of Management
Depositing User:	Ester Sri W. 196039
Date Deposited:	18 May 2022 02:00
Last Modified:	19 Dec 2024 06:29
URI:	http://repository.ubaya.ac.id/id/eprint/41868

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