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

St. Ibrah Mustafa Kamal and Eduardus Tandelilin

A chapter in Macroeconomic Risk and Growth in the Southeast Asian Countries: Insight from SEA, 2023, vol. 33B, pp 99-113 from Emerald Group Publishing Limited

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.

Keywords: Institutional ownership; dividend policy; debt policy risk; substitution effect; two-stage least square; agency theory; G32; G35; G38 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:isetez:s1571-03862023000033b007

DOI: 10.1108/S1571-03862023000033B007

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