: 10.56472/25835238/IRJEMS-V4I11P105
Dea Adielyani, Aulizza Abdul Fanni. "The Role of Life Cycle, Growth Opportunity, and Previous Year Dividend Policy on the Dividend Policy of Primary Consumer Goods Companies Listed on the IDX 2020-2024" International Research Journal of Economics and Management Studies, Vol. 4, No. 11, pp. 29-35, 2025. Crossref. http://doi.org/10.56472/25835238/IRJEMS-V4I11P105
This research investigates the factors that motivate a firm to adopt a dividend policy using PCG companies in Indonesia as an emerging market, and toward the corporate life cycle, growth opportunities, and prior dividend payouts. Applying panel least squares regression with fixed effects on a sample of 120 firms over the period, 2020–2024, it is found that lagged dividend payout and firm age have a significant effect on the current dividend policy. These results also support the dividend smoothing theory (which suggests that firms move toward stable dividends), and provide evidence for the "maturity hypothesis" (explaining that older firms with accumulated profits are more likely to pay dividends). Conversely, the growth prospects and company size were found to have no significant impact, contradicting conventional wisdom under which higher dividends are paid to large firms. This implies that local market conditions and institutional factors moderate these relationships in emerging economies. Noteworthy is the study’s particular consideration of only one EM, the construction of proxies for the complex variables and a short time horizon of five years being utilized, which could affect applicability/generality as well as temporal implications. Industry-specific dividend behaviour may also be obscured by the sectoral diversity of the sample. This research may be extended by cross-country comparison with sector-specific analysis to test the external validity. Use of different variable proxies and greater horizons would contribute to the robustness and insight of dividend policy dynamics. Analysis of qualitative information from managerial interviews could reveal governance and contextual mechanisms that motivate firms' dividend choices, especially regarding agency issues. Novel evidence on dividends policy from emerging markets comes with emphasizing the importance of firms’ past payout behavior and their age, suggesting that local context details and governance challenges should be carefully weighed in conjunction with classic dividend theories by scholars and practitioners.
[1] Agarwal, N., & Chakraverty, A. (2023). Growth Opportunities, Information Asymmetry, and Dividend Payout: Evidence from Mandatory IFRS Adoption. European Accounting Review, 32(1), 113–139. https://doi.org/10.1080/09638180.2021.1938622
[2] Aisah, N., & Hariyono, A. (2020). Pengaruh Struktur Kepemilikan dan Growth Opportunity terhadap Dividend Payout Ratio. JIATAX (Journal of Islamic Accounting and Tax), 3(1), 45. https://doi.org/10.30587/jiatax.v3i1.2312
[3] Al-Hiyari, A., Kolsi, M. C., Lutfi, A., Shakkour, A. S., & aljumah, A. I. (2024). Information asymmetry and dividend payout in an emerging market: Does corporate governance quality matter? Journal of Open Innovation: Technology, Market, and Complexity, 10(1), 100188. https://doi.org/10.1016/j.joitmc.2023.100188
[4] Almeida, J. E., & Kale, D. (2024). Firm life cycle and accrual quality. Advances in Accounting, 67, 100762. https://doi.org/10.1016/j.adiac.2024.100762
[5] Ananzeh, H., Khalifeh, A., Alqudah, H., Al‐Ababneh, H. A., & Al Amosh, H. (2025). ESG rating, corporate dividends policy, and the moderating role of corporate life cycle: Cross country study. International Studies of Economics, 20(3), 297–321. https://doi.org/10.1002/ise3.104
[6] Angga, A., & Yuhilza, H. (2023). Kebijakan Dividen Sub Sektor Barang Konsumsi pada Era Sebelum dan Sesudah Terdampak Covid-19 Perusahaan Manufaktur di BEI dengan Pendekatan ANFIS. Jurnal Ilmiah Komputasi, 22(1). https://doi.org/10.32409/jikstik.22.1.3097
[7] Athari, S. A. (2021). The effects of institutional settings and risks on bank dividend policy in an emerging market: Evidence from Tobit model. International Journal of Finance & Economics, 26(3), 4493–4515. https://doi.org/10.1002/ijfe.2027
[8] Athari, S. A., Cho Teneng, R., Çetinkaya, B., & Bahreini, M. (2024). Country risk, global uncertainty, and firms’ cash holdings: Do the role of law, culture, and financial market development matter? Heliyon, 10(5), e26266. https://doi.org/10.1016/j.heliyon.2024.e26266
[9] Aziekwe, O., & Okegbe, T. O. (2025). JOURNAL OF GLOBAL ACCOUNTING BOARD DIVERSITY AND FINANCIAL PERFORMANCE OF LISTED CONSUMER GOODS FIRMS IN NIGERIA. https://journals.unizik.edu.ng/j
[10] Brown, S., & Powers, E. (2020). The life cycle of make-whole call provisions. Journal of Corporate Finance, 65, 101772. https://doi.org/10.1016/j.jcorpfin.2020.101772
[11] Cadenovic, J., Deloof, M., & Paeleman, I. (2024). Do dividend policies of privately held firms follow a life cycle? The European Journal of Finance, 30(5), 457–480. https://doi.org/10.1080/1351847X.2023.2206523
[12] de Souza Junior, W. D., Hijazi, M. M., & da Silva, T. P. (2025). Determinants of Dividend Payout Policy: More Evidence From Emerging Markets of
[13] Dereeper, S., & Turki, A. (2016). Dividend policy following mergers and acquisitions: US evidence. Managerial Finance, 42(11), 1073–1090. https://doi.org/10.1108/MF-10-2015-0293
[14] Dsouza, S., Nasseredine, H., Habibniya, H., & Tripathy, N. (2025). Do firm-level variables impact dividend payout? Examining application of two-step system GMM panel model. Cogent Social Sciences, 11(1). https://doi.org/10.1080/23311886.2025.2472915
[15] Kwame Doffour, E., Asamoah, E. B., Anim, I. K., & Agyenim-Boateng, E. (2025). Factors That Influence Dividend Policy: Do Macroeconomic Factors Matter? Finance, Accounting and Business Analysis, 120. https://doi.org/10.37075/FABA.2025.1.10
[16] Louziri, R., & Oubal, K. (2022). Determinants of Dividend Policy: The Case of the Casablanca Stock Exchange. Journal of Risk and Financial Management, 15(12), 548. https://doi.org/10.3390/jrfm15120548
[17] Njoku, O. E., & Lee, Y. (2024). Revisiting the Effect of Dividend Policy on Firm Performance and Value: Empirical Evidence from the Korean Market. International Journal of Financial Studies, 12(1), 22. https://doi.org/10.3390/ijfs12010022
[18] Ren, S., Cheng, Y., Hu, Y., & Yin, C. (2021). Feeling right at home: Hometown CEOs and firm innovation. Journal of Corporate Finance, 66, 101815. https://doi.org/10.1016/j.jcorpfin.2020.101815
[19] Singh, R., Gupta, C. P., & Chaudhary, P. (2023). Dividend policy and corporate life cycle: a study of Indian companies. Managerial Finance, 49(11), 1722–1749. https://doi.org/10.1108/MF-01-2023-0053
[20] Sirait, E. C. J., Butar-Butar, H., & Melianna, S. (2025). The Influence of Firm Size, Profitability, and Solvency on Dividend Policy in BEI-Listed Property Companies (2019-2023). Jurnal Bisnis Mahasiswa, 5(4), 1982–1996. https://doi.org/10.60036/jbm.713
[21] Siregar, S. D., Toni, N., & Ariesa, Y. (2023). Impact of dividend policy, capital structure, and profitability on consumer goods firm value: Role of firm size (2013-2022). Journal of Economics and Business Letters, 3(4), 38–48. https://doi.org/10.55942/jebl.v3i4.234
[22] Subramaniam, R. K., Shaiban, M., & Devi Suppiah, S. K. (2014). GROWTH OPPORTUNITIES AND DIVIDEND POLICY: SOME EVIDENCE ON THE ROLE OF ETHNICITY IN AN EMERGING ECONOMY’. In Corporate Ownership & Control (Vol. 12, Issue 1).
[23] Subramaniam, R. K., Shaiban, M., & Suppiah, S. D. (2014). Growth opportunities and dividend policy: some evidence on the role of ethnicity in an emerging economy. Corporate Ownership and Control, 12(1), 126–138. https://doi.org/10.22495/cocv12i1p9
[24] Yakubu, I. N., Kapusuzoğlu, A., & Ceylan, N. B. (2022). The Effect of Corporate Governance on Firm Dividend Policy: Evidence from Ghana. Muhasebe ve Finansman Dergisi, 94, 223–238. https://doi.org/10.25095/mufad.1064148
[25] Yousef, I., Tanna, S., & Patra, S. (2021). Testing dividend lifecycle theory in the Islamic and conventional banking sectors of GCC countries. Journal of Islamic Accounting and Business Research, 12(2), 276–300. https://doi.org/10.1108/JIABR-04-2020-0115
Dividend policy, Life Cycle, Growth Opportunity.