The Impact of Losses and Cash Flows on Dividend

Abstract

Ristiono (2005), The Impact of Losses and Cash Flows on Dividend.Yogyakarta. Accounting Department. Economic Faculty. Islamic University of Indonesia. The objective of the research is to examine the impact of cash flows, earnings, and losses insetting dividend policy. More specifically; i)earnings, cash flows, and annual losses are posited to be associated with dividend changes in firms with established earnings and dividend record and ii) dividend reductions, current operating earnings and cash flow have information in predicting future earnings. As much as 60 manufacturing companies listed on Jakarta Stock Exchange within 1997-2002 of fiscal year were taken as a sample of the research. Data from audited financial statement were taken from Jakarta Stock Exchange. The statistical method used to test the hypothesis is a linear regression model. Twenty two models are considered in this research. The 1st until 15th models are used to examine the association of earnings, cash flows, and losses with dividend changes. The 16th until 22nd are used to examine that dividend reduction, current operating earnings, and cash flows have information inpredicting future earnings. The result of the research reveals that there is an association between earnings, cash flows, and losses with dividend changes. Result also indicates that dividend reductions, current operating earnings and cash flows have an information to predict future earnings.