The Impact of COVID-19 Pandemic on Dividend Policy Relevance to Firm Value: the case of Indonesian Banking Industry

Winoto, Cliff Oliver and Rudiawarni, Felizia Arni (2023) The Impact of COVID-19 Pandemic on Dividend Policy Relevance to Firm Value: the case of Indonesian Banking Industry. In: The 5th International Conference on Future of Business, Management and Economics, 20-22 Oct 2023, Rome, Italy. (Submitted)

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Abstract

Banking industry is synonymous to larger dividend payment compared to other sectors. The complexity of dividend policy is further exacerbated by the occurrence of COVID-19 pandemic. This research is aimed to test the impact of COVID-19 pandemic on dividend policy relevance to firm value. Firm value is measured by firm market value and TOBINSQ. Meanwhile dividend policy is measured by dividend payout ratio and dividend yield ratio. This research used the available data for the 2018 to 2022 period. The research methodology employed for this research is multiple linear regression. This research does not find significant impact from dividend policy on firm value and supports Irrelevance Theory, both for pre-COVID-19 pandemic and during COVID-19 pandemic. However, this research finds differing significant impact on each common equity tier that reflects the dynamic expectation imposes by the market for each common equity tier. This research also finds a more profound negative and significant impact of dividend policy on firm value for state-owned banks compared to private banks. This finding is indicative of tunneling in state-owned banks. Furthermore, banking-specific components like non-performing loan (negative) and capital adequacy ratio (positive) consistently impacts the banks’ firm value.

Item Type:	Conference or Workshop Item (Paper)
Uncontrolled Keywords:	Dividend Policy, Firm Value, COVID-19, Irrelevance Theory, Signalling Theory
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HG Finance
Divisions:	Faculty of Business and Economic > Department of Accounting
Depositing User:	Felizia Arni Rudiawarni 31129
Date Deposited:	13 Oct 2023 06:51
Last Modified:	13 Oct 2023 06:51
URI:	http://repository.ubaya.ac.id/id/eprint/45109

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