Archive | 2019
INVESTMENT OPPORTUNITY SET, DIVIDEND POLICY AND CORPORATE VALUE: EVIDENCE FROM TRADE, SERVICES AND INVESTMENT SECTOR OF INDONESIA STOCK EXCHANGE
Abstract
The purpose of this paper is to investigate influences the proxy of\xa0investment opportunity\xa0set\xa0and\xa0dividend policy\xa0on\xa0corporate value. This\xa0study is\xa0tested with a sample of trade, services and investment sector in Indonesia Stock Exchange which is contained 72 companies covering a 3-years period\xa0from\xa02009\xa0to\xa02011. Structural equation modeling with Partial Least Square is used\xa0in\xa0this\xa0study. This paper found\xa0a significantly positive influence\xa0between the proxies of\xa0investment opportunity set on dividend policy. In addition, there is a significantly positive influence\xa0between the proxies of dividend policy on corporate value. The result had consistently with informational content of dividend that explained that dividend paid was considered to be companies prospect in the future. This result also supported signaling theory that emphasize dividend paid is a signal on the market. The result also revealed\xa0a significantly positive influence\xa0between the proxies of investment opportunity set\xa0on\xa0corporate value. This result has supporting and consistently with research result by Fama (1978). Direct effect from investment decision on corporate value is results obtained of investment activity itself.