DIVIDEND IRRELEVANCE THEORY: BUKTI EMPIRIS PADA SEJUMLAH EMITEN DI JSX

Abstract

Future stock price prediction is not easy, there are same methods and theories developed for that particular purpose. Dividend irrelevance theory is the theory argued that dividend payment and dividend policy has no significant effect, than it would be irrelevant. It was developed by Merton Miller (MM), the value of the firm depends only on the basic earning power and its business risk.

The aim of this study is to determine the acceptance or in the contrarily rejection of the application of dividend irrelevance theory in Indonesia go public companies. The datas gathered by sampling of 50 emittens from The Jakarta Stock Exchange, from various industries We utilized dividend payout ratio to represent the dividend payment as an independent variable and the market price at the cum date following price as dependent variable

The result is, with the significant level, a=0.05 and the degree of freedom 48, we have the our come of r = 0.242052165 it means the dividend payment has a positive and low influencing to the price of the stock in the market Further, from hypothesis test obtained Ho is rejected with determination coefficient 5.859% The implication is, dividend irrelevance theory is not fully accepted

Keywords: Dividend irrelevance theory, dividend payout ratio, cum date.