Dividend policy, CEO Narcissism, and its influence on companies in Indonesia: A Behavioral Theory of the Firm approach

Figures & data

Graphic 1. Comparison of composite Index, market to book value, and Tobin’s Q.

Source: www.google.finance.com; osiris (2023)

Figure 1. Research framework.

Table 1. Descriptive statistics

Variables	Obs	Mean	Std. Dev.	Min	Max
MBV	423	3.521	7.992	−1.685	82.444
Tobin’s Q	423	1.474	2.516	.024	22.559
DPR	423	34.084	28.848	0	224.796
CEO_CH	423	3.161	.92	1	4
Tot_Pic	423	3.203	2.142	0	20
Size	423	24.394	1.314	21.349	27.979
ROA	423	7.233	8.837	−64.4	46.3
ROE	423	16.603	25.998	−217.9	144.6
Lev	423	47.382	25.341	.23	100
Firm_Age	423	42.787	24.664	2	122
CEO_Gen	423	.964	.186	0	1
CEO_Age	423	56.23	7.596	32	81
CEO_Ten	423	12.304	9.873	1	39
CEO_Edu	423	.511	.5	0	1

Source: Author’s Computation

Table 2. Pairwise correlations

Variables	MBV	Tobin’s Q	DPR	Dum_Div	CEO_CH	Tot_Pic	Size	ROA	ROE	Lev	Firm_Age	CEO_Gen	CEO_Age	CEO_Ten	CEO_Edu
(1) MBV	1.000
(2) Tobin’s Q	0.935*	1.000
(3) DPR	0.352*	0.417*	1.000
(4) Dum_Div	0.145*	0.169*	0.541*	1.000
(5) CEO_CH	0.061	0.037	0.031	0.038	1.000
(6) Tot_Pic	0.112	0.085	0.040	0.037	0.261*	1.000
(7) Size	−0.135*	−0.255*	−0.067	0.080	0.210*	0.239*	1.000
(8) ROA	0.602*	0.709*	0.441*	0.312*	0.064	0.005	−0.241*	1.000
(9) ROE	0.678*	0.636*	0.333*	0.284*	0.082	0.062	−0.035	0.602*	1.000
(10) Lev	0.080	−0.072	−0.123	0.014	−0.004	0.128*	0.498*	−0.166*	0.009	1.000
(11) Firm_Age	0.189*	0.130*	−0.033	0.125	0.103	0.071	0.300*	0.041	0.176*	0.245*	1.000
(12) CEO_Gen	−0.004	−0.068	0.092	0.140*	−0.063	−0.346*	0.028	0.002	0.045	0.127*	0.031	1.000
(13) CEO_Age	−0.027	−0.023	−0.071	0.044	−0.116	0.003	0.010	−0.035	−0.004	0.124	0.125	0.122	1.000
(14) CEO_Ten	−0.111	−0.040	0.008	−0.072	−0.009	−0.213*	−0.359*	0.014	−0.080	−0.290*	−0.088	0.048	0.181*	1.000
(15) CEO_Edu	0.107	0.100	0.088	0.089	0.030	0.319*	0.160*	−0.020	0.031	0.067	0.082	−0.034	−0.141*	−0.304*	1.000

***p<0.01, **p<0.05, *p<0.1

Source: Author’s Computation

Table 3. Main results

Dependent variable	MBV
	(1)	(2)	(3)
Intercept	6.695	7.065	10.615*
	(1.229)	(1.292)	(1.751)
DPR	0.028***	0.028***	−0.049
	(3.203)	(3.250)	(−1.091)
CEO_CH	-	0.273	−0.594
	-	(1.005)	(−1.432)
Interaction	-	-	0.027*
	-	-	(1.694)
Size	−0.582**	−0.628***	−0.651***
	(−2.518)	(−2.647)	(−2.697)
ROA	0.229***	0.223**	0.213***
	(2.617)	(2.577)	(2.660)
ROE	0.137**	0.137**	0.133**
	(2.505)	(2.501)	(2.487)
Lev	0.084***	0.085***	0.082***
	(4.317)	(4.306)	(4.316)
Firm_Age	0.052***	0.052***	0.052***
	(3.465)	(3.449)	(3.516)
CEO_Gen	−0.317	−0.399	−0.447
	(−0.314)	(−0.386)	(−0.448)
CEO_Age	−0.027	−0.027	−0.027
	(−0.866)	(−0.853)	(−0.861)
CEO_Ten	−0.055***	−0.055***	−0.064***
	(−2.845)	(−2.839)	(−3.074)
CEO_Edu	0.908*	0.907*	1.023**
	(1.771)	(1.769)	(2.026)
YEAR EFFECT	Yes	Yes	Yes
INDUSTRY EFFECT	Yes	Yes	Yes
ADJ.R2	0.61	0.61	0.61
N	421	421	421
F-STAT	8.946	8.915	7.383

t statistics in parentheses

*p<0.10, **p<0.05, ***p<0.01

Source: Author’s Computation

Table 4. Robustness test

		Alternative Measurement of Dependent Variable				Alternative Measurement of Independent Variable
Dependent variable		Tobin’s Q				MBV				Tobin’s Q
		(1)	(2)	(3)		(4)		(5)	(6)	(7)	(8)	(9)
Intercept		2.333	2.383	3.506*		6.169***		5.904***	6.203***	4.158***	4.500***	4.359***
		(1.429)	(1.465)	(1.951)		3.840		3.554	3.812	4.891	5.019	4.865
DPR		0.010***	0.010***	−0.015		-		-	-	-	-	-
		(3.970)	(3.960)	(−1.259)		-		-	-	-	-	-
Dum_Div		-	-	-		0.031***		-	0.026**	0.405***	-	0.387**
		-	-	-		4.594		-	2.141	3.558	-	1.954
CEO_CH		-	0.037	−0.237*		-		−0.033	−0.076	-	−0.030	−0.032
		-	(0.482)	(−1.956)		-		(0.894)	(0.974)	-	(1.518)	(0.741)
Tot_Pic		-	-	-		-		-	-	-	-	-
		-	-	-		-		-	-	-	-	-
Interaction		-	-	0.008**		-		-	0.002	-	-	0.005
		-	-	(2.087)		-		-	0.517	-	-	0.113
Size		−0.170**	−0.176***	−0.183***		−0.179***		−0.153**	−0.166***	−0.131***	−0.127***	−0.128***
		(−2.532)	(−2.601)	(−2.689)		(2.841)		(2.325)	(2.578)	(−3.949)	(3.598)	(3.664)
ROA		0.100***	0.099***	0.096***		0.042***		0.056***	0.042***	0.093***	0.081***	0.081***
		(2.822)	(2.812)	(2.886)		4.323		5.617	4.281	17.700	14.953	9.575
ROE		0.032**	0.032**	0.031**		0.023***		0.026***	0.023***	−0.005***	−0.002	−0.003
		(2.145)	(2.141)	(2.146)		7.037		7.858	6.991	(3.202)	(0.940)	(1.486)
Lev		0.021***	0.021***	0.020***		−0.002		−0.001	−0.002	−0.005***	−0.007***	−0.006***
		(4.252)	(4.211)	(4.221)		(0.559)		(0.413)	(0.524)	(3.089)	(3.881)	(3.353)
Firm_Age		0.014***	0.014***	0.014***		−0.005*		−0.004	−0.005*	−0.003*	−0.002	−0.003**
		(3.639)	(3.639)	(3.730)		(1.765)		(1.385)	(1.857)	(1.840)	(1.521)	(1.961)
CEO_Gen		−0.261	−0.272	−0.287		−1.701***		−1.601***	−1.887***	−1.164***	−1.168***	−1.278***
		Alternative Measurement of Dependent Variable				Alternative Measurement of Independent Variable
Dependent variable		Tobin’s Q				MBV				Tobin’s Q
		(−0.902)	(−0.928)	(−0.995)		(4.715)		(3.997)	(4.803)	(6.059)	(5.406)	(5.715)
CEO_Age		−0.004	−0.004	−0.005		0.025***		0.028***	0.026***	0.013***	0.015***	0.014***
		(−0.471)	(−0.465)	(−0.477)		2.806		2.961	2.876	2.760	2.980	2.873
CEO_Ten		−0.007	−0.007	−0.010		−0.017**		−0.019**	−0.018**	−0.002	−0.003	−0.003
		(−1.128)	(−1.122)	(−1.533)		(2.238)		(2.359)	(2.298)	(0.563)	(0.650)	(0.763)
CEO_Edu		0.523***	0.523***	0.560***		−0.176		−0.069	−0.125	0.089	0.119	0.102
		(3.654)	(3.647)	(3.915)		(1.271)		(0.460)	(0.859)	1.214	1.472	1.275
YEAR EFFECT		Yes	Yes	Yes		Yes		Yes	Yes	Yes	Yes	Yes
INDUSTRY EFFECT		Yes	Yes	Yes		Yes		Yes	Yes	Yes	Yes	Yes
ADJ.R2		0.69	0.69	0.69		0.32		0.29	0.32	0.52	0.49	0.51
N		421	421	421		421		421	421	421	421	421
F-STAT		20.234	19.800	18.327		295.16		289.22	292.00	704.36	536.31	389.87
Alternative Measurement of Moderating Variable
Dependent variable	MBV									Tobin’s Q
	(10)				(11)		(12)			(13)	(14)	(15)
Intercept	6.695				7.301		12.635**			2.333	2.454	4.021**
	(1.229)				(1.316)		(1.996)			(1.429)	(1.483)	(2.178)
DPR	0.028***				0.027***		−0.056			0.010***	0.010***	−0.015
	(3.203)				(3.211)		(−1.644)			(3.970)	(3.977)	(−1.611)
Dum_Div	-				-		-			-	-	-
	-				-		-			-	-	-
CEO_CH	-				-		-			-	-	-
	-				-		-			-	-	-
Tot_Pic	-				0.148		−0.694**			-	0.029	−0.218**
	-				(1.065)		(−2.230)			-	(0.720)	(−2.496)
Alternative Measurement of Moderating Variable
Dependent variable	MBV									Tobin’s Q
	(10)				(11)		(12)			(13)	(14)	(15)
Interaction	-				-		0.027**			-	-	0.008**
	-				-		(2.329)			-	-	(2.578)
Size	−0.582**				−0.626***		−0.624**			−0.170**	−0.178***	−0.178**
	(−2.518)				(−2.607)		(−2.533)			(−2.532)	(−2.604)	(−2.542)
ROA	0.229***				0.226***		0.216***			0.100***	0.099***	0.096***
	(2.617)				(2.622)		(2.690)			(2.822)	(2.822)	(2.853)
ROE	0.137**				0.137**		0.126**			0.032**	0.032**	0.029**
	(2.505)				(2.505)		(2.437)			(2.145)	(2.146)	(2.058)
Lev	0.084***				0.083***		0.075***			0.021***	0.020***	0.018***
	(4.317)				(4.336)		(4.435)			(4.252)	(4.273)	(4.229)
Firm_Age	0.052***				0.052***		0.048***			0.014***	0.014***	0.013***
	(3.465)				(3.463)		(3.531)			(3.639)	(3.632)	(3.672)
CEO_Gen	−0.317				0.227		−1.357			−0.261	−0.153	−0.618*
	(−0.314)				(0.201)		(−1.129)			(−0.902)	(−0.484)	(−1.776)
CEO_Age	−0.027				−0.035		−0.045			−0.004	−0.006	−0.009
	(−0.866)				(−1.004)		(−1.279)			(−0.471)	(−0.583)	(−0.882)
CEO_Ten	−0.055***				−0.051***		−0.047**			−0.007	−0.006	−0.005
	(−2.845)				(−2.660)		(−2.435)			(−1.128)	(−0.991)	(−0.786)
CEO_Edu	0.908*				0.754		0.878*			0.523***	0.493***	0.529***
	(1.771)				(1.472)		(1.787)			(3.654)	(3.389)	(3.769)
YEAR EFFECT	Yes				Yes		Yes			Yes	Yes	Yes
INDUSTRY EFFECT	Yes				Yes		Yes			Yes	Yes	Yes
ADJ.R2	0.61				0.61		0.62			0.69	0.69	0.71
N	421				421		421			421	421	421
F-STAT	8.946				9.216		7.373			20.234	20.436	23.190
Generalized Method of Moment (GMM)
Dependent variable	MBV									Tobin’s Q
	(16)				(17)		(18)			(19)	(20)	(21)
Lag (−1)	0.213***				0.218***		0.931***			0.101***	0.109***	0.116***
	(33.703)				(24.521)		(48.273)			(4.181)	(4.026)	(4.727)
DPR	0.009**				0.009*		−0.045***			0.011***	0.011***	0.003
	(2.177)				(1.780)		(−2.004)			(3.068)	(3.422)	(0.830)
Dum_Div	-				-		-			-	-	-
	-				-		-			-	-	-
CEO_CH	-				0.051		−2.746***			-	0.053	−0.093
	-				(0.289)		(−5.246)			-	(0.542)	(−0.704)
Tot_Pic	-				-		-			-	-	-
	-				-		-			-	-	-
Interaction	-				-		0.019***			-	-	0.003**
	-				-		(3.590)			-	-	(2.365)
Size	−0.801				−0.654		−0.005			0.354*	0.353	0.255
	(−1.010)				(−1.030)		(−0.013)			(1.842)	(1.652)	(1.492)
ROA	−0.059***				−0.065***		0.068***			0.031***	0.028***	0.031***
	(−5.497)				(−5.541)		(3.260)			(2.996)	(3.063)	(3.687)
ROE	0.037***				0.038***		0.159***			0.024***	0.026***	0.023***
	(13.984)				(9.962)		(15.445)			(5.898)	(5.072)	(4.545)
Lev	0.122***				0.122***		−0.100***			−0.003	−0.001	−0.001
	(18.150)				(16.298)		(−8.812)			(−0.289)	(−0.074)	(−0.046)
Firm_Age	0.101				0.034		0.614***			−0.097***	−0.098**	−0.069**
	(1.191)				(0.406)		(5.041)			(−2.725)	(−2.596)	(−2.082)
CEO_Gen	5.007*				2.499		−1.892			−3.115***	−3.219***	−2.797**
Generalized Method of Moment (GMM)
Dependent variable	MBV									Tobin’s Q
	(16)				(17)		(18)			(19)	(20)	(21)
	(1.874)				(0.671)		(−0.554)			(−2.971)	(−2.969)	(−2.324)
CEO_Age	−0.564***				−0.511***		−0.285**			−0.083**	−0.082*	−0.077**
	(−7.941)				(−7.339)		(−2.339)			(−2.131)	(−1.948)	(−2.159)
CEO_Ten	0.289***				0.207**		−0.285			0.065	0.057	0.051
	(3.296)				(2.622)		(−1.653)			(1.651)	(1.408)	(1.268)
CEO_Edu	−1.610				−1.476		−1.743			2.294**	2.320**	1.785*
	(−1.231)				(−1.239)		(−1.145)			(2.619)	(2.614)	(1.948)
SARGAN TEST	0.244				0.212		0.403			0.195	0.128	0.140
AR2	0.402				0.388		0.407			0.216	0.099	0.357

t statistics in parentheses

*p<0.10, **p<0.05, ***p<0.01

Source: Author’s Computation

Appendix A. Variable description

Labels	Variables	Definition	References
MBV	Firm Value	Share Price divided by book value	Fama and French (2002)
Tobin’s Q	Firm Value	The market capitalization and book value of total debt to the book value of total assets	Likitwongkajon and Vithessonthi (2020); Sisodia et al. (2021)
DPR	Dividend Policy	Total Dividend divided by net profit	Baskin, 1989; Holder et al. (1998)
CEO_CH	CEO Narcissism	Scoring the size of CEO’s photo in annual report: Score 4: if there is a CEO’s photo that occupies a full page Score 3: if there is a photo of the CEO himself with a half-page size Score 2: if the CEO takes a photo with the board of directors Score 1: if there is no photo of the CEO	Chatterjee and Hambrick (2007)
CEO_Photo	CEO Narcissism	The number of photo of CEO in annual report	Modified
Ln_Size	Firm Size	The natural logarithm of total assets	Berger and Bonaccorsi di Patti (2006); Diantimala et al. (2021); Vo and Ellis (2017)
ROA	Profitability	The ratio of net income to the total assets	Jihadi et al. (2021); Asni and Agustia (2021); Deswanto and Siregar (2018)
ROE	Profitability	The ratio of net income to the total equity	Deswanto and Siregar (2018);Setiawanta et al. (2021)
LEV	Leverage	The ratio of total debts divided by total assets	(Jihadi et al., 2021)
Firm_Age	Firm Age	The ratio of firm’s age	Berger and Bonaccorsi di Patti (2006); Diantimala et al. (2021); Vo and Ellis (2017)
CEO_Age	CEO Age	A dummy variable that takes a value of one if the firm was audited by one of the Big Four auditors and zero otherwise.	(Li & Singal, 2019)
CEO_Gen	CEO Gender	A dummy variable that takes a value of one if the CEO is a male, and zero otherwise.	(Li & Singal, 2019)
CEO_Ten	CEO Tenure	The ratio of experience of being CEO.	(Li & Singal, 2019)
CEO_Edu	CEO Education	A dummy variable that takes a value of one if the CEO graduated from economic faculty, and zero otherwise.	(Li & Singal, 2019)

Source: Author’s Summary

Descriptive statistics - by (Year)

Year	MBV	TobinsQ	DPR	Dum_Div	CEO_CH	Tot_ Pic	Size	ROA	ROE	Lev	Firm_Age	CEO_Gen	CEO_Age	CEO_Ten	CEO_Edu
2011	3.746	1.767	35.123	23.842	2.936	2.574	23.849	11.349	22.520	43.921	38.787	.979	54.851	11.106	.489
2012	3.963	1.857	31.402	24.745	3.106	2.809	24.047	10.081	17.925	44.999	39.787	.979	55.596	11.447	.468
2013	3.438	1.571	36.044	24.906	3.149	3.362	24.222	7.831	14.117	47.368	40.787	.979	56.574	12.106	.468
2014	4.14	1.630	32.300	24.049	3.064	3.489	24.360	7.230	16.231	50.696	41.787	.979	55.574	11.766	.511
2015	3.428	1.279	33.496	23.851	3.170	3.426	24.355	3.966	16.210	50.514	42.787	.957	55.587	11.826	.522
2016	3.462	1.345	32.012	23.807	3.149	3.298	24.540	6.161	15.398	46.510	43.787	.935	55.130	11.826	.522
2017	3.836	1.426	36.863	22.609	3.404	3.277	24.609	6.491	17.876	46.205	44.787	.957	56.468	12.723	.553
2018	2.781	1.256	38.530	23.889	3.234	3.532	24.748	6.451	16.268	48.396	45.787	.957	57.936	13.574	.532
2019	2.895	1.138	30.987	19.861	3.234	3.064	24.814	5.533	12.880	47.832	46.787	.957	58.319	14.340	.532

Source: Author’s Computation

Summary statistics: N mean SD min max by (Year)

YEAR	N	Mean	SD	Min	Max
2011	47	35.123	21.997	0	100
2012	47	31.402	19.454	0	100
2013	47	36.044	24.123	−1.198	116.731
2014	47	32.300	21.758	−2.478	96.800
2015	47	33.496	27.182	−.004	114.070
2016	47	32.012	27.022	0	99.840
2017	47	36.863	32.827	0	183.882
2018	47	38.530	38.919	−3.8190	224.796
2019	47	30.987	39.965	−45.977	169.196

Source: Author’s Computation

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