The COVID-19 Pandemic Impact on Corporate Dividend Policy of Sustainable and Responsible Investment in Indonesia: Static and Dynamic Panel Data Model Comparison

Round 1

Reviewer 1 Report

1. There are some grammatical mistakes. I recommend that an English Expert revises the paper
2. The abstract needs to be improved; it cannot be seen as the paper's novelty. It doesn't even present clearly what the authors did and why
3. The introduction cannot visualise the paper's objective and what is the difference between this research and many others on the same topic. Also, at the end of the introduction, a paragraph explaining the document's structure is recommended.
4. There are a lot of acronyms that are never explained
5. In conclusion, an ending paragraph with future research proposals is recommended.

Author Response

Dear,
Reviewer 1

I have attached the Response to Reviewer 1 by the following attachment. Please see the attachment to see the Response. We hope the Response of the review is eligible.

Our best regards,
On behalf of the authors,

Corresponding Author

Author Response File: Author Response.pdf

Reviewer 2 Report

Dear authors

I appreciate your hard work in writing a good piece of research.

I understand that COVID 19 has impacted many areas of social and corporate lives across the globe, hence it is pertinent to write about the causes and effects around this global phenomenon.

However, I must point out that your basic premise about the hypothesis setting in this paper is based upon "Pecking Order Theory" (POT). As I noted that you referred to the following paper

"Pecking order theory states that corporate capital funding is prioritized for internal sources ..... (Damodaran, 2015; Myers, 1984). Crisis conditions such as the COVID-19 pandemic that occurred 124 globally systematically forced companies to increase retained earnings due to the uncertainty of the economy in 2020."

While it is understandable that POT has a role in such circumstances, I would rather suggest that you also consider the "Survival Aspect". It has been seen that instead of only resorting to increased RE, many businesses also resort to overspending and investing into alternative survival strategies, some by way of innovations and restructuring. So, decreased dividends many not be result only of POT in favor of REs; instead some of that may also be due to decreasing profits and reallocation of resources. 

I would appreciate, if authors can accommodate some of these aspects too in their arguments. I may suggest that, in case it is difficult to adjust analytical model to allow for this, authors may choose to mention them as their model's limitations.

Also, I suggest considering the following paper to be included in the paper references as the paper  seems an appropriate citation that should help tehe authors to cement the literature review.

Paper Title: "Green Investment Policy Initiatives in Japan"

Conference: 15th International Scientific and Practical Conference of the Russian Society for Ecological Economics Strategies and Tools, Stavropol, Russia, At: Stavropol, Russia, Volume: 33.

Goodluck!

Reviewer

Author Response

Dear,
the Reviewer 2

I have attached the Response to Reviewer 2 by the following attachment. Please see the attachment to see the Response. We hope the Response of the review is eligible.

Our best regards,
On behalf of the authors,

Corresponding Author

Author Response File: Author Response.pdf

Reviewer 3 Report

Referees’ report on “The COVID-19 Pandemic Impact on Corporate Dividend Policy 2 of Sustainable and Responsible Investment in Indonesia: Static 3 and Dynamic Panel Data Model Comparison”

April 6, 2022

 

In general, the work is good. The objective and the hypotheses are consistent with the methodology (static and dynamic data panel with the Hausman, Lagrange Multiplier Arellano-Bond tests). The organization of the sections is adequate. The bibliography seems complete to me. The work contributes to a better understanding of the impact of the COVID-19 pandemic on corporate dividend policy. However, it requires some major improvements.

 

Comments and suggestions to improve the submitted paper:

1. The abstract must be written correctly. Numbers of equations, models and tools that appear in the course of the investigation cannot be mentioned in the Abstract. The Abstract is to give you a general idea of ​​what will be found in the course of the investigation. It does not define in the abstract what is SRI-KEHATI and AGE. It should be written Sustainable and Responsible Investment of KEHATI Stock It is also curious that in the abstract the authors use variables that are defined in the text of the work as "parameter estimation due 26 to the alleged correlation between U_it and PYD_i,t”. I have never seen an abstract like this.

 

2. It should be written in the Abstract, ”Sustainable Responsible Investment (SRI) of the KEHATI (Keanekaragaman Hayati Indonesia) biodiversity foundation Stock Index, Briefly SRI-KEHATI.”

 

3. It should be written in the Abstract, AGE, which means the age of the firm.

 

4. The references in the text are not in the form required by the Journal.

 

5. There are many acronyms in the text that are not defined, g., PSBB, IDX, LSDV, etc.

 

6. Line 225 says “Error for the i-th cross-section element and the t-the time series element”. What does “t-the time” mean?

 

7. Section says “5. Result”, it should say “5. Results” or “5. Empirical Results”.

 

8. Line 47 says “International Monetary Funds”, it should say “International Monetary Fund”.

 

9. Line 166 says “H5: There is a positive influence ????,?−1 on Dividend Policy”, it should say “H5: There is a positive influence of ????,?−1 on Dividend Policy”.

 

10. Section 3 begins with a Table; this is strange. You need to start with a text.

 

11. It is necessary to mention the econometric software that was used.

 

12. The explanation below table 11 is somewhat confusing. It is necessary to rewrite it more clearly.

 

13. The first paragraph of the Conclusions is in Indonesian.

 

14. It remains to be included in the Conclusions what could be the consequences in other similar economies in the region with respect to the impact of the COVID-19 pandemic on corporate dividend policy.

 

15. Improve writing at work, for instance lines 48, 134, 336, etc.

 

 

 

I will gladly review the corrected version, without guaranteeing its acceptance.

Author Response

Dear,
Reviewer 3

I have attached the Response to Reviewer 3 by the following attachment. Please see the attachment to see the Response. We hope the Response of the review is eligible.

Our best regards,
On behalf of the authors,

Corresponding Author

Author Response File: Author Response.pdf

Reviewer 4 Report

 

Few comments to improve.

1. There are a number of papers that examine the COVID–19 pandemic on the dividend/dividend policy (see Cejnek, Randl, & Zechner, 2021; Krieger, Mauck, & Pruitt, 2021). How do authors differentiate with these papers? How does the paper contribute to the literature?
2. Abstract is not focused. It should be shortened and sharpened. Also, it talks much about the methodology, that should be avoided.
3. The paper should add more theoretical rationale to the tested relationships.
4. The introduction should be slightly modified to include:
   -       One paragraph that positions the paper compared to the academic literature.
   -       One paragraph that details the chapter's contribution to the literature, if any.
   -       One paragraph that summarizes/presents the results of the study. This paragraph should be the ultimate paragraph in the introduction before giving the remaining parts of the chapter.
   -       The last paragraph of the introduction should "introduce" the remaining parts of the paper.
5. The sample size is really small. With this size sample size, reliable inferences are hard to achieve.
6. All tables in the chapter should be self-sufficient. Authors should add a caption for each table that explains its objective and content. Readers should be able to understand the table without going back to the text. Please proceed in the same way for figures.

References

Cejnek, G., Randl, O., & Zechner, J. (2021). The Covid-19 pandemic and corporate dividend policy. Journal of Financial and Quantitative Analysis, 56(7), 2389-2410.

Krieger, K., Mauck, N., & Pruitt, S. W. (2021). The impact of the COVID-19 pandemic on dividends. Finance Research Letters, 42, 101910.

Author Response

Dear,
Reviewer 4

I have attached the Response to Reviewer 4 by the following attachment. Please see the attachment to see the Response. We hope the Response of the review is eligible.

Our best regards,
On behalf of the authors,

Corresponding Author

Author Response File: Author Response.pdf

Round 2

Reviewer 3 Report

The authors do not know how to write an abstract. It is a bit sad. I am writing the abstract for them

This research investigates the impact of crisis due to the COVID-19 pandemic on the dividend policy of green index companies in Indonesia, namely the Sustainable and Responsible Investment (SRI) by Biodiversity (KEHATI) Foundation, or SRI-KEHATI indexed companies. The purposive sampling technique was used to collect data from companies listed from 2014 to 2020 using static and dynamic panel data models. From several panel data models tested, the static panel data regression with random effects model (REM) that uses the generalized least square is the best econometric model feasible. Also, the fixed effect model (FEM) uses the least square dummy variable-robust standard error (LSDV-RSE) technique. The system generalized method of moments (SYS-GMM) is used as a suitable econometric model with a robustness test used to determine static panel data regression. It is reported that SRI-KEHATI indexed companies tend to distribute dividends positively during this crisis robustly, which gives a positive signal to the capital market concerning the sluggish trading activity in capital market. The market reaction test using two-approaches showed that this business did not provide a positive reaction to the capital market, which turned out to be pessimistic. Furthermore, profitability and financial leverage have a robust effect, while dividends from the previous year affect dividend policy on the static panel data model and firm size affect dividend policy on SYS-GMM. Predictors that proved influential with a direction not in line with the hypothesis were Investment opportunities on REM and SYS-GMM, and firm age on SYS-GMM. The parameter estimation that passes the model specification test is feasible, whiles the habit and inconsistency of parameter estimation due to the alleged correlation between errors and variables failed to occur in static panel data regression. The endogeneity issue was resolved by dynamic panel data regression with the strongest corrective effect. This research can be used as a reference for investors to obtain optimal returns on green index companies in the country. An optimal dividend policy can increase the value of the SRI-KEHATI indexed companies; therefore, it can contribute optimally to sustainability and responsibility for social and environmental aspects

 

Author Response

Dear,
Reviewer 3

I have attached the Response to Reviewer 3 by the following attachment. Please see the attachment to see the Response. We hope the Response of the review is eligible.

Our best regards,
On behalf of the authors,

Corresponding Author

Author Response File: Author Response.pdf

Reviewer 4 Report

Thanks for your response. Despite I have reservations about the contributions made by the paper (I raised them in the last round), I suggest the following to improve the paper.

1. The abstract is too long. It needs to be shortened and focused on the policy implications. There is a lot of discussion on the methodology. That should be shortened in the abstract.
2. Keywords include static panel data regression and dynamic panel data regression. I think those should be removed and add new keywords related to the topics.
3. The authors need to further extend the literature on the effect of COVID–19 pandemic on the financial markets in the manuscript (see Akhtaruzzaman et a. (2021).
4. Tables should be re-designed. Some of the tables appear to be difficult for readers to follow. Please check the tables in published papers for guidance.
5. Authors apply Arellano and Bond’s (1991) GMM for dynamic panel data to deal with endogeneity problems. Further discussion is needed on how the endogeneity issues are overcome. The current manuscript just discussed the results.

References

Arellano, M., & Bond, S. (1991). Some tests of specification for panel data: Monte Carlo evidence and an application to employment equations. The Review of Economic Studies, 58(2), 277-297.

Akhtaruzzaman, M., Boubaker, S., Lucey, B. M., & Sensoy, A. (2021). Is gold a hedge or a safe-haven asset in the COVID–19 crisis? Economic Modelling, 105588. https://www.sciencedirect.com/science/article/pii/S0264999321001772

Author Response

Dear,
Reviewer 4

I have attached the Response to Reviewer 4 by the following attachment. Please see the attachment to see the Response. We hope the Response of the review is eligible.

Our best regards,
On behalf of the authors,

Corresponding Author

Author Response File: Author Response.pdf

Round 3

Reviewer 4 Report

Thanks for the changes made. However, the tables are not yet in compliance with the journal style. Please change those.