We examine the roles of dividends and leverage to mitigate agency problems within family firms in Indonesia. Using simultaneous equations, we find a significant negative association between family ownership and dividend payout and a two-way negative relation between dividend payout and leverage. Our analysis reveals that, compared to non-family firms, family firms tend to maintain a lower dividend pay-out and higher leverage. The presence of large non-family ownership appears to have an impact on determining levels of private benefit control. During the Asian and global financial crisis, family firms changed their dividend pay-out more than non-family firms did.
Evy, M., Harminder, S., & Segarika, M. (2016). Dividends, leverage, and family ownership in the emerging Indonesian Market. Journal of International Financial Markets, Institutions and Money, 43, 16–29.