The Combined Effect of Dividend Policy and Treasury Stock Purchase: Analysis Based on the Dividend Life Cycle Hypothesis and Signal Theory of Treasury Stock Purchase

The development of financial system recently has been contributing to the economic growth of the nation. Its vital role helps many financial institutions to advance their financial services, particularly in investment systems such as Sukuk. As seen in recent years, the involvement of Sukuk in many industries ranging from sovereigns to corporates for both Muslim and non-Muslim world companies. Although its popularity increases, it seems to be widely accepted that the insufficient structures of Sukuk become a big challenge to serve the public needs to be in compliance with Shari’ah principles. In an attempt to fulfil many financial companies in issuing Sukuk and the needs of the Muslim world, this study aims to provide the new structure of Sukuk. The study proposes a design of securitization by combining two contracts of Sukuk into one Sukuk structure. The constructed idea will use a model of life cycle hypothesis to support the Sukuk issuing companies in maintaining their incomes. It also explains the cycle cash flow and asset movement as well as the calculation of Net Present Value (NPV) of the project.

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Do We Need a Regulation on Dividends for Indonesia Stock Exchange?

Gadjah Mada International Journal of Business ◽

10.22146/gamaijb.25055 ◽

2018 ◽

Vol 20 (1) ◽

pp. 33 ◽

Cited By ~ 3

Author(s):

Leo Indra Wardhana ◽

Eduardus Tandelilin

Keyword(s):

Life Cycle ◽

Stock Exchange ◽

Life Cycles ◽

Listed Firms ◽

Financial Firms ◽

Dividend Payments ◽

Life Cycle Hypothesis ◽

Recent Idea

This study examines the dividend life-cycle hypothesis and the propensity of non-financial firms listed on the Indonesia Stock Exchange (IDX) to pay dividends, in light of a recent idea by the IDX to regulate dividend payments. Using several proxies of the life cycle, the results consistently show that Indonesian listed firms follow the dividend life-cycle hypothesis. Our results recommend that if the authority insists on regulating dividend payments, the regulation should take into account the firms’ life cycles. Firms should only be required to pay dividends when they reach a certain stage and/or meet defined characteristics, according to their stage or characteristics.

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FAKTOR-FAKTOR PENENTU TINGKAT TABUNGAN DI INDONESIA: PENDEKATAN MODEL LIFE CYCLE HYPOTHESIS

Optimum Jurnal Ekonomi dan Pembangunan ◽

10.12928/optimum.v1i2.7802 ◽

2011 ◽

Vol 1 (2) ◽

pp. 148

Author(s):

Arintoko Arintoko

Keyword(s):

Life Cycle ◽

Life Cycle Hypothesis ◽

Model Life Cycle

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The Life Cycle Hypothesis

Franco Modigliani ◽

10.1057/9780230582439_4 ◽

2008 ◽

pp. 79-106

Author(s):

Michael Szenberg ◽

Lall Ramrattan

Keyword(s):

Life Cycle ◽

Life Cycle Hypothesis

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A Re-examination of the Validity of the Life Cycle Hypothesis (LCH): Evidence from Emerging Europe

10.15179/ces.22.2.3 ◽

2020 ◽

Vol 22 (2) ◽

pp. 73-99

Author(s):

Mehmed Ganic ◽

◽

Agim Mamuti ◽

Keyword(s):

Life Cycle ◽

Transition Countries ◽

Demographic Variables ◽

Dynamic Interactions ◽

Savings Behavior ◽

Common Correlated Effects ◽

Life Cycle Hypothesis ◽

Heterogeneous Panel ◽

Empirical Methodology

The study aims to empirically explore the dependence of savings behavior on demographic changes in the context of the life cycle hypothesis (LCH) in a sample of 18 European transition and post transition countries. The empirical methodology is based on a multifactor modeling approach. The research estimates heterogeneous panel data models by employing three different heterogeneous coefficient estimators: mean group (MG) estimator, common correlated effects mean group (CCEMG) estimator, and augmented mean group (AMG) estimator. The findings demonstrate that the LCH is confirmed in the case of European post-transition countries and rejected as inappropriate in European transition countries due to inconsistency of regression coefficients (age dependency, unemployment rate, urbanization, and health expenditure). The models and their findings presented in this study can be used in policymaking to predict dynamic interactions and variations among selected demographic variables in the determination of savings behavior.

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