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The solution to overcome the disappearing dividend phenomenon: Learning from the experience of the Indonesia Stock Exchange

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  • Zainul Kisman
  • Aviral Tiwari

Abstract

The purpose of this article is to determine what causes the phenomenon of disappearing dividends, which mostly occurs in stock exchanges in developed and emerging countries. This is the phenomenon of the decreasing probability of issuers to choose to pay dividends (cash, stock, and mixed) rather than not to pay. The results of multinomial logit model show, that size and profitability have a significant positive effect on cash, stock, and mixed dividend decisions. The decision not to pay dividends is influenced by low agency costs, high debt, over-liquidity, and excessive investment opportunities. To overcome this phenomenon, all stakeholders must be able to manage the above cause variables in an integrated manner.

Suggested Citation

  • Zainul Kisman & Aviral Tiwari, 2020. "The solution to overcome the disappearing dividend phenomenon: Learning from the experience of the Indonesia Stock Exchange," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1858566-185, January.
    • Handle: RePEc:taf:oaefxx:v:8:y:2020:i:1:p:1858566
    DOI: 10.1080/23322039.2020.1858566
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    Cited by:

    1. Jiang, Cuixia & Nie, Yubing & Xu, Qifa, 2023. "A MIDAS multinomial logit model with applications for bond ratings," Global Finance Journal, Elsevier, vol. 57(C).

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