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Institutional Ownership, Dividend Policy, Debt Policy, and Risk: An Analysis of Simultaneous Equation

In: Macroeconomic Risk and Growth in the Southeast Asian Countries: Insight from SEA

Author

Listed:
  • St. Ibrah Mustafa Kamal
  • Eduardus Tandelilin

Abstract

The first alternative is to enrich shareholding by management. The basic theory of this research is the agency theory. This study aims to examine the institutional ownership, dividend policy, debt policy, and risk that are interconnected directly or indirectly. The research sample was a non-financial company from 2010 to 2014. Four variables will be tested using Two-stage Least Square (2SLS) in the SPSS application. The result of this study represents the overall interdependency relationship among institutional ownership, dividend policy, debt policy, and risk. The research outcome signifies an interdependency relation for endogenous variables, even if some exogenous variables have no significant relation. In addition, the effects of substitution between institutional ownership and dividend policy, debt policy and dividend policy, and institutional ownership and risk. Meanwhile, institutional ownership and dividend policy, risk and dividend policy, and risk and debt policy have no substitution effect.

Suggested Citation

  • St. Ibrah Mustafa Kamal & Eduardus Tandelilin, 2023. "Institutional Ownership, Dividend Policy, Debt Policy, and Risk: An Analysis of Simultaneous Equation," International Symposia in Economic Theory and Econometrics, in: Macroeconomic Risk and Growth in the Southeast Asian Countries: Insight from SEA, volume 33, pages 99-113, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:isetez:s1571-03862023000033b007
    DOI: 10.1108/S1571-03862023000033B007
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    More about this item

    Keywords

    Institutional ownership; dividend policy; debt policy risk; substitution effect; two-stage least square; agency theory; G32; G35; G38;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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