Types of Dividends According to Warsono (2003), dividends received by

shareholders can be divided into three types, including:

shareholders, depending on the position and ability of the company concerned. The

following are the types of dividends according to Brigham and Houston (2012):

increases, but the payment of this stock dividend will not change the company's liquidity

position because what is paid by the company is not part of the company's cash flow.

dividends that are distributed must be goods that can be divided or homogeneous parts

(having the same nature) and their delivery to shareholders will not disrupt the continuity

of the company.

Company will pay a certain amount and at a certain time, as stated in the script. Payments

Dividend policy is a decision whether the profits earned by the company will be

distributed to shareholders as dividends or will be retained in the form of retained

earnings to finance investments in the future. Based on the amount of dividend payment,

the dividend policy is divided into 4 (four) types, namely:

opinion. These opinions include:

1) Dividends are distributed as much as possible. The argument for this opinion is that

stock prices are influenced by dividends paid. Thus, if the dividend is increased, the stock

price will be higher. So here the company must share all profits as dividends, just because

emission cost (floatition cost). So they argue that dividends should be distributed as small

as possible, to the extent that they can be used profitably rather than distributing

dividends, so it is necessary to issue new shares and pay flotation costs.

Dividend Policy Theory According to investor preferences, there is a theory

underlying dividend policy (Brigham and Houston, 2012), namely:

has no effect on the value of the company or the cost of capital. An increase in dividend

payments is only possible if the profit earned by the company also increases. The gains

obtained from the increase in share prices due to dividend payments will be offset by a

issue. This theory states that the value of the company is not influenced by the size of the

dividend payout ratio , but only determined by the profitability and risk of the business,

assuming that there is no tax paid on dividends, shares can be bought and sold without

any transaction costs, but all parties, both managers and shareholders have the same

information about the company's profits in the future. which will come.

dividends than waiting for capital gains. Dividends are better than retained earnings

because in the end retained earnings may never materialize as dividends in the future. The

cost of equity will increase if dividends are reduced, because shareholders will pay higher

returns and consider the risk and certainty of their reinvestment. On the other hand, the

receiving capital gains resulting from retained earnings than if investors received

dividends. This theory argues that investors actually value the expected income from

dividends much more than the expected income from capital gains. MM in this case does

not agree that equity or firm value does not depend on dividend policy, which implies that

investors do not care about dividends and capital gains. Miller and Modigliani (MM) call

this Gordon-Lintner opinion a bird-in-the-hand fallacy, namely: based on the idea that

investors view one bird in hand as more valuable than a thousand birds in the air. Thus, a

company that has a high dividend payout ratio will have a high company value as well.

However, in MM's view, most investors plan to reinvest their dividends in shares of the

company concerned or similar companies, and in many cases, the level of risk of the

company's cash flows for investors in the long term is determined only by the level of risk

delay paying taxes. Therefore, investors require a higher rate of return on stocks that

provide high dividend yields, low yields of capital gains than stocks with low dividend

yields, and high yields of capital gains. If the tax on dividends is greater than the tax on

capital gains, this difference will be even more pronounced. If management believes that

the theory of irrelevant dividends from MM is true, then the company does not need to

care about how much dividends should be divided, but if they adhere to the relevant

dividend theory, then they must divide the entire profit after tax or EAT (Earnings After

Tax) in the form of dividends. If management tends to believe in the Tax Differential

Theory, they must withhold the entire EAT or DPR = 0%. So, the three theories that have

been discussed represent the extreme poles of the theory of dividend policy.

prefer dividends over capital gains. But MM argues that a dividend increase above is

usually a signal to investors that the company's management predicts a good future

dividend income. Conversely, a decrease in dividends or an increase in dividends below

the normal increase is believed by investors as a sign that the company is facing a

difficult dividend period in the future. Like other dividends, this theory is also difficult to

prove empirically. Dividend changes contain some information. But it is difficult to say

whether the increase and decrease in prices after the increase and decrease in dividends is

solely due to the sign effect or due to the sign effect and preference for dividends.

preferences for the company's dividend policy. The group of shareholders who need

prefer capital gains because they can delay paying taxes. This group prefers if the

company distributes a small dividend. On the other hand, the group of shareholders who

are subject to relatively low taxes tend to like large dividends. Empirical evidence

suggests that this Clientele effect exists. But according to MM this does not indicate that

it is better than small dividends, and vice versa. Dividend policy is a decision whether the

profits earned by the company will be distributed to shareholders as dividends or will be

retained in the form of retained earnings to finance investment in the future. If the

company chooses to distribute profits as dividends, it will reduce retained earnings and

further reduce the total source of internal funds or internal financing (Rizqia & Sumiati,

2013). On the other hand, if the company chooses to hold on to the profits earned, then

the ability to form internal funds will be even greater. Thus, this dividend policy must be

making a decision in determining the amount of dividends to be paid to shareholders.

Therefore, the stronger the company's liquidity position, the greater its ability to pay

dividends. This means, the stronger the liquidity position of a company against the

prospect of future funding needs, the higher the dividend payout ratio.

company. The greater the need for future funds to finance growth, the company is usually

more likely to hold its earnings than to be paid as dividends to shareholders given the cost

constraint. This means that the faster the company's growth rate, the greater the

opportunity to earn profits, the greater the share of retained earnings in the company, the

with funds from the sale of new shares, it would weaken the control of the dominant

group in the company. Likewise, if you finance the expansion with debt, it will increase

the financial risk. Recording internal spending in an effort to maintain control over the

company, this means reducing the dividend payout ratio.

have a great opportunity to enter the capital market and other forms of external financing

(Xiang & Worthington, 2015). However, a new company or a start-up company will be

profits to finance their operations. So, established companies tend to give higher payout

rates than small/new companies.

Research conducted by Md. Zakir Hosain with the title “Determinants of the

Dividend Payout Policy: A Study on Listed Private Commercial Banks of Dhaka Stock

payout policies of private banks listed as commercial banks in Bangladesh. In this study,

eight variables are considered as potential determinants of dividend payout policy. Both

pooled ordinary least square (POLS) and dynamic panel regression models were run on a

the main determinants of dividend payments of private banks in Bangladesh.

A study conducted by Bogna Kaźmierska-Jóźwiak entitled “Determinants of

Dividend Policy: Evidence from Polish Listed Companies, concludes that dividend policy

is still a controversial issue in corporate finance. The question, when and why companies

pay dividends, is still valid. Extensive literature has examined the dividend policies of

companies from developed countries, particularly from America. Relatively few studies

have been published by researchers on the dividend policy of companies from developing

countries. The main objective of this study is to determine the cash dividend payments of

companies registered in Poland. In this study, panel data analysis was conducted to

significant and negative relationship between the dividend payout ratio and the two

factors analyzed, namely: profitability (ROE) and leverage (LEV). The results show that

the dividend payout ratio is a negative function of profitability and leverage. The results

show that Polish non-financial companies listed on the Warsaw Stock Exchange are the

same as the determinants of dividend policy in developed countries.

Research by Dr. P. Vidhya Priya and Dr. M. Mohanasun with the title: Dividend

Policy and Its Impact on Firm Value: A Review of Theories and Empirical Evidence. The

research is categorized into two different schools of thought, the first is that the

company's dividend policy has an impact on firm value and the second is that the

company's dividend policy has no impact on firm value. This study provides a complete

dividend policy. However, due to the ongoing nature and the variety of debates on

dividend policy that have taken place among researchers that are growing day by day, a

full review of all the debates may not be feasible. This study reviews the existing theories

about dividend policy and its empirical findings.

From the literature review, it can be determined that the theory of dividend policy

has different relevance between management and shareholders arising from conflicting

interests. Management is mainly focused on the objective growth of the organization

while shareholders focus on shareholder wealth which is reflected in the share price

which determines their return on investment. This study shows a positive relationship

between dividend payments and firm value (Kim, Yang, Yang, & Koveos, 2021).