Devidend Definitions from Nine Journal Articles

Dividends are the distribution of profits to share owners according to the number of shares owned. this division will reduce retained earnings and cash available to customers company, but distribution of profits to owners is the main goal of a business. A number of the company may have a Reinvestment Plan Dividends (dividend reinvestment). This allows para shareholders to use their dividends wisely systematically to buy a small amount of shares that would normally be without commission. In some cases, they don't have to pay taxes on reinvestment of these dividends, but it is usually necessary pay commission. 

All dividend announcements, whether dividend reduction policy announcements or dividend increase policy announcements, are reacted by the market, which is reflected in the form of abnormal returns, which is significantly proven by the fact that dividends contain information. Market reactions to announcements. a decrease in dividends, contrary to the predictions of signaling theory. So not distributing dividends actually provides good news for investors. On the announcement of the dividend increase, the capital market did not agree. semi-strong market efficiency hypothesis. from the aspect of speed to react. This shows the market is inefficient and shows mixed perceptions. So, based on the analysis of the dividend announcement, it can be concluded that the Indonesian Stock Exchange does not support the semi-strong market form hypothesis.

At Dividend Omission Announcement there are 3 observations that are significant and in accordance with the theory and occur time lag. So it also shows that the market is inefficient. This is in line with the results of Yulianto's research, Hans (1999) who found that In 1997 the condition of the Jakarta Stock Exchange did not include the market efficiency of the half-strong form. This suggests that changes in stock prices do not adequatelyreflect dividend announcement information, which means that markets react slowly indicated by market reactions several days after the announcement of dividends is made public. So concluded that dividend announcement is not goodnews for investors, dividend announcement information has not been received simultaneously by the investor, and Jakarta Stock Exchange reacts slowly to dividend announcement.

Dividend Irrelevance Theory this theory states that a company's dividend policy has no influence on the value of the company or its cost of capital. This theory was put forward by Merton Miller and Franco Modigliani (MM). They argue that the value of a company is not determined by the size of the Dividend Payout Ratio but the value of the company is only determined by its basic ability to generate profits and business risks. 

Dividend policy is one of the company policies that must be implemented carefully considered and considered. In the dividend policy is determined the amount of profit allocation that can be distributed to shareholders (dividends) and allocation of profits that the company can retain. The greater the retained earnings, the more small profits will be distributed to shareholders. In allocating profits As a result, various problems arise.

The results of this research support research conducted by Taswan (2003) and Putradkk (2007), Wibowo and Aisjah (2013) with research results that dividend policy which is proxied through the dividend payout ratio (DPR) has no effect on company value. The results of this research are different from the findings by Yadnyana and Wati (2011), Sukirni (2012) and Mardiyatidkk (2012) who stated that dividend policy had a significant positive effect on company value.

The company has to choose a dividend strategy. It is assumed that the company will want to maximize the value function defined in (1.8). The resulting strategy is called an optimal dividend strategy and will be denoted by 9". The definition is simple, but the question of when dividends and hote much of them should be distributed is a tricky one. On one hand, if the whole surplus is distributed at once, there is a big dividend, but there will be no more in the future since the company is instantly ruined. On the other hand, if payments are searce and of modest amounts, there will be more of them, but they will be penalized by the discount factor<1.

Three main contradictory theories of dividends can be identified. Some argue that increasing dividend payments increases a firm's value. Another view claims that high dividend payouts have the opposite effect on a firm's value; that is, it reduces firm value. The third theoretical approach asserts that dividends should be irrelevant and all effort spent on the dividend decision is wasted. These views are embodied in three theories of dividend policy: high dividends increase share value theory (or the so-called 'bird-in-the- hand' argument), low dividends increase share value theory (the tax-preference argument), and the dividend irrelevance hypothesis. Dividend debate is not limited to these three approaches. Several other theories of dividend policy have been presented, which further increases the complexity of the dividend puzzle. Some of the more popular of these arguments include the information content of dividends (signalling), the clientele effects, and the agency cost hypotheses. These are discussed in turn below beginning with dividend irrelevance hypothesis. 

Decisions that dividend payers must take on an orderly basis whether to increase dividends or not. Lintner (1956) shows that dividends are sticky and companies are usually reluctant to cut dividends. Thus, our next measure of dividend policy examines dividend increases by dividend payouts. the dividend increase percentage is greater than 15%, and otherwise zero.

"written to fulfill Dr Darmawan's financial management course assignment"