FACTORS AFFECTING DIVIDEND POLICY IN COMPANIES
IN THE ERA OF COVID-19 PANDEMIC
�
Marieta Ariani, Rakendro Wijayanto, Tyas Pambudi Raharjo, Hasnawati, Oktaviani
Universitas
Trisakti, Indonesia
Email: [email protected], [email protected], [email protected],
[email protected], [email protected]
|
KEYWORDS Dividend
Policy, Free Cash Flow, Collateralizable Assets, Debt Policy,
Profitability |
ABSTRACT This study aims to examine
the effect of free cash flow, profitability, collateralizable asset and debt
policy on dividend policy. The method of data analysis in this study uses the
method of multiple regression analysis on Eviews
program assistance and data collection method using purposive sampling. The
data used are secondary data obtained from 81 data� financial statements of sector
property, real estate and building construction companies listed on the
Indonesia Stock Exchange in 2019-2021. The results of this study indicate
that the free cash flow and collateralizable assets variable has a positive
influence on dividend policy, while profitability and debt policy variable has no postitive effect on
dividend policy |
INTRODUCTION
Global
economic conditions have changed significantly in recent years due to the
Covid-19 pandemic. The consequences of the pandemic forced people to work more
at home, leading to recessions in economic and industrial sectors. One of the
capital markets whose performance has fallen during the pandemic is the
Indonesian capital market. According to (Willis, Ezer, Lewis, Bismark, & Smallwood, 2021),
from the end of 2019 to the end of 2021, around 5% of issuers in Indonesia
experienced a decrease in fundamental returns. This can be seen in many
negatively profitable companies as well as in the slower turnover of company
assets. As a result of the decline in productivity, many companies are
experiencing financial problems.
According
to (Sartono & Ardhani, 2016), it is generally
very difficult for companies to develop their business without financial
support from third parties, namely investors. Therefore, the company always
strives to provide positive information to shareholders, one of which is
related to the company's ability to maintain the welfare of shareholders in the
form of dividend payments. Considering that one of the investment goals set by
investors is to maximize the return on available funds.
(Lubis & Ovami, 2020)
argue that a company's consistency in meeting dividend obligations attracts
investors outside the company to invest immediately by buying shares of the
company that can maintain its commitment to investors. The more consistently a
company meets its dividend obligations, the easier it is for the company to
attract new investors as a source of funding for the company. The outbreak of
the Covid-19 pandemic so far is likely to have an impact on the ability of
Indonesian issuers to pay cash dividends.
During the COVID-19 pandemic, it
was difficult for many companies to maintain their consistency to pay dividends
in cash to shareholders. The following companies in the fields of property,
real estate, and building construction have carried out �the GMS and carried out their
obligations in distributing dividends in 2020.
Table 1
Companies That Have Implemented GMS
|
No |
Emit |
Stock Code |
Divide |
CATERPILLAR |
|
1 |
PT Wijaya Karya (Persero) Tbk. |
LANGUAGE |
IDR 50,955 |
09 June 2020 |
|
2 |
PT Waskita Karya (Persero) Tbk. |
WSKT |
IDR 3.4557 |
09 June 2020 |
|
3 |
PT PP (Persero) Tbk. |
PTPP |
IDR 33,842 |
04 June 2020 |
|
4 |
PT Jaya Konstruksi Manggala Pratama Tbk. |
JKON |
IDR 2.40 |
09 June 2020 |
Source: KSEI and IDX
On the one hand, there are
companies that do not actually distribute dividends. The policy not to
distribute dividends is carried out by the company, the stability of the
company's financial position has been maintained in the face of the
increasingly widespread impact of Covid-19.
�
Table 2
List of Issuers That Do Not Distribute Dividends
|
No |
Emit |
Stock Code |
Price Per Share |
|
1 |
PT Adhi Karya (Persero) Tbk. |
ADHI |
IDR 1,795 |
|
2 |
PT Acset Indonusa
Tbk |
ACST |
IDR 256 |
Source: KSEI and IDX
From the table above, it can be
seen that these companies have advantages but there are differences in dividend
distribution policies. In the Annual General Meeting of Shareholders (AGMS) PT
Adhi Karya (Persero) Tbk
decided that the net profit was entirely used as a reserve or retained
earnings.
According to (Brigham & Houston, 2006),
company policies to meet dividend obligations can be influenced by a number of
variables, namely free cash flow, leverage, profitability to
business risks. In addition, there are several variables that are considered to
affect dividend policy in the company, including collateralizable
assets, and debt policy (Deviyanti & Riyanto, 2021)
(Naue, Hayati, Andini, Putri, & Rubiarti, 2021)
states that profitability is the ability of a company to make a profit at a
certain level of sales, assets, and capital.) The definition of rate of return
is a measuring tool used to measure the efficiency of a company in making a
profit. (Harun & Jeandry, 2018)
examined profitability, free cash flow, leverage, liquidity and size of dividend policies in
manufacturing companies listed on the IDX for the period 2011-2015. The results
of the analysis show that profitability has a positive effect on �dividend policy and free cash flow negatively affects dividend �policy. Meanwhile, leverage, liquidity and size do not affect dividend
policy. (Kristian, 2021)
examined profitability, liquidity, leverage, and company size towards dividend
policy The results of the analysis showed that profitability and liquidity were
negative. Meanwhile, leverage and company size showed positive but not
significant results.
Free cash flow is a number of funds derived from excess profits that can be used by the
company to carry out various activities including securities investments or
make the excess funds into retained earnings. When a company has a �high free cash flow, �it is likely that the company will
be able to fulfill its obligations to shareholders so that mareka
will choose to use a cash dividend policy (Sartono & Ardhani, 2016). Research
conducted by (Erni Alfisah, 2018), (Arfan & Maywindlan, 2013), and (Lolo & Ricambi, 2019)
found that free cash flow has a positive effect on dividend policy.
However, research by (Mardiyati, Nusrati, & Hamidah, 2014)
and (Parsian & Shams Koloukhi, 2014)
found that free cash flow negatively affects dividend policy. Meanwhile,
research by (Efni, 2011), (Giriati, 2016),
(Wijaya & Felix, 2017)
actually found that free cash flow has no effect on dividend policy.
(Darmayanti & Mustanda, 2016)
stated that collateralizable assets �are the amount of assets guaranteed by
the company to creditors in making their loans. The higher �the collateral asset will �be able to reduce �the conflict of interest between
shareholders and creditors which will have an impact on increasing the total
dividend distributed by the company. Research by (Deviyanti & Riyanto, 2021)
shows that collateralizable assets have a positive and significant
effect on dividend policy.
Debt policy is a policy taken by
companies to finance through debt (Isticharoh, 2016). The company's
policy to fund its business activities using funds from external to the company
will require the company to make payment of obligations. The existence of this
obligation will make the company allocate the profit it earns to pay the company's
obligations, so that the profit that will be allocated to investors will be
used by the company to pay the company's debts. Debt policy is often measured
by debt ratio. Research by (Ekawati & Siswoyo, 2015), found that debt
policy has a positive effect on dividend policy. However, the research of (Mangundap, Ilat, & Pusung, 2018), (Trisnadewi, Rupa, Saputra, & Mutiasari, 2019)
found that debt policy negatively affects dividend policy. Meanwhile, the
research of (Erni Alfisah, 2018), (Rafique & Zafar, 2012), (Setiawati & Yesisca, 2016)
actually found that debt policy has no effect on dividend policy.
Overall, this study refers more to the research conducted by (Deviyanti & Riyanto, 2021).
The difference with this study lies in the addition of 1 independent variable,
namely profitability and a research period that is more adapted to the
situation after the Covid-19 pandemic. Another difference in the population
used is that the property, real estate, and building construction
sectors will certainly change the number of samples used as well.
Agency Theory
The
theory of agency, also known as contracting theory, �was
initiated by (Ross & Glomset, 1973)
which was later developed by (Jensen & Meckling, 1979)
in their research entitled Theory of the Firm: Managerial Behavior, Agency
Costs, and Ownership Structure. Agency theory is a theory that describes
the agency relationship between the owner of capital (principal) and the management
of the company (agent).� �The owner �of the capital (principal) �delegates their work and decision-making
authority to the management of the company (agent). As a representative
of the capital owner, the manager must make decisions that can maximize the
value of the capital owner and stakeholders.
However, based on research
conducted by Jensen and Meckling (1976) revealed that
managers will look for opportunities to improve personal well-being above the
interests of capital owners. This difference in purpose can cause a conflict of interest between principal and agent.
According
to (Adnovaldi & Wibowo, 2019), agents have more information about the company's
operations and performance when compared to principals. Therefore, the owner of capital in this case will find it difficult
to effectively control the actions carried out by the management because they
have little information available. Conditions like this can lead to an asymmetric information because the company's management knows more
information about the internals and continuity of the company and does not
provide the entirety of the actual information to the owner of the capital
According to Jensen & Meckling, 1976 in
True et al (2020) Another way
to mediate agency problems is to increase debt. This argument is supported by
the statement that with increasing debt, the smaller the portion of shares that
the company will sell and the greater the company's debt, the smaller the idle
funds that the company can use for unnecessary expenses. The greater the debt,
the more cash the company has to reserve more cash to pay interest and
principal on the loan. On the other hand, if the company determines that the
payment of its debts is taken from retained earnings, it means that the company
must withhold most of the profits from its income for this purpose. This means
that only a small percentage of income or earnings can be paid as dividends. In
other words, the company must set� a low dividend payout ratio.
�Signalling Theory
According
to Sihombing (2018), signaling theory shows that the
increase in dividends affects the increase in stock prices in the market and
vice versa the decrease in dividends affects the decline in stock prices in the
market. This theory focuses on dividend policy relating to the future prospects
of the company. This theory states that dividend payments are a signal of the
company to investors about the future prospects of the company. When investors
consistently pay high dividends, it sends a positive signal to investors that
the company's financial position is in good condition, and vice versa. This
theory is also called the theory of the information content of dividends, since
dividends contain information about, for example, the future prospects of the
company. According to the theory of the signal hypothesis, dividends are a
means of reducing the asymmetry of information between a company and an
investor. With the size of dividend payments, investors can measure the
company's financial performance and cash flow, where investors can use dividend
payments to predict the company's future prospects.
Effect of Free Cash
Flow on Dividend Policy
When the company has excess cash,
then what is needed is to fund projects that have a positive Net Present
Value (NPV). However, it is better for managers to return excess cash to
shareholders in the form of dividends in order to maximize shareholders'
wealth. This shows that dividends can �reduce agency costs because they reduce the free
cash flow available to managers.
The results of previous research
conducted by Rostanty (2018) and Sejati
et al (2020) revealed that free cash flow affects dividend policy.
Research by Ginting and Munawarah
(2018) and Deviyanti and Riyanto
(2021) also shows that free cash flow has a positive and significant
effect on dividend policy. Dividend availability can only be paid if sufficient
cash is available (Alfisah & Kurniaty,
2018). Based on the description, the hypothesis is formulated as follows:
: Free Cash Flow has a positive effect on Dividend
Policy�����
The Effect of
Profitability on Dividend Policy
Profitability is the ability of
an enterprise to make a profit over a certain period of time and can be
calculated by comparing sales with total capital. This shows that knowing the
profitability of a company is very important for investors and creditors (Putra
and Yusra, 2019). Profitability is a company's ability to make a profit in the
future and is an indicator of the success of the company's operations (Mardiyati et al., 2014). (Ahmad & Wardani,
2014; Mardiyati et al., 2014; Wijaya & Felix,
2017) found that Return On Asset (ROA) has a positive
effect on Dividend Policy. However, (Nurwulansari
& Rikumahu, 2018; Tumiwa
& Mamuaya, 2019) found that Return On Asset (ROA) negatively affects Dividend Policy.
Meanwhile, Iswahyuni (2018) actually found that Return On Asset (ROA)
has no effect on Dividend Policy. Based on the description, the hypothesis is
formulated as follows:
: Profitability has a positive effect on Dividend
Policy
Effect of Collateralizable
Assets on Dividend Policy
Based
on the agency's theory, it states that if the large number of assets can be
pledged it will substantially reduce the conflict of interest between
financiers and executives, since the company's assets can be used to secure its
debts. A high asset guarantee implies if the company's ability to repay debt
will be strong, as a result of which creditors will refrain from imposing
restrictions on dividend distribution, ensuring if the company pays large
amounts of dividends (Jannah & Azizah, 2019). As
a result, it is said that the more collateralized company assets, it will have
an impact on the high dividends distributed, and vice versa, the fewer
collateralized assets the company has, the lower the dividends distributed (Sidharta & Nariman, 2021).
This
is in line with the research of Deviyanti and Riyanto (2021) showing that collateralizable assets have a positive effect on dividend policy.
Likewise, in Lubis's research (2017), it shows that collateralizable
assets have a positive impact on
dividend policy. �Based on the description, the hypothesis is
formulated as follows:
: Collateralizable Assets positively affect
dividend policy�������
Effect of Debt Policy on Dividend
Policy
Debt
policy has an influence on dividend policy can be due to signal theory which
argues that dividends are used as a tool to predict the condition of the
company in the future. There is a tendency that the stock price will rise if
there is an announcement of an increase in cash dividend and the stock price
will fall if there is an announcement of a decrease in dividends. This
certainly affects investors' decisions in investing their shares in the
company.
Debt
is an obligation of a business entity or company to a third party that is paid
through the delivery of company assets or services within a certain period of
time in accordance with the agreement where this obligation occurs as a result
of past transactions. Financing with debt is an alternative in supporting the
need for funds to ensure the success of the company's investment decisions.
Debt can also increase or decrease the rate of return for equity holders. In
difficult times the rate of return of equity holders is reduced through the use
of debt, but if the opposite happens, the rate of return increases. If the
company has large obligations and must be paid immediately, shareholders must
be sacrificed, that is, to postpone or reduce the payment of dividends.
Research
conducted by Sejati et al (2020) shows that debt
policy has a negative and significant influence on dividend policy. Likewise,
the research of Ginting and Munawarah
(2018) shows that debt policy has a significant effect on dividend policy.
Based on the description, then the hypothesis can be summed up as follows:
: Debt Policy negatively affects Dividend Policy
METHOD�� RESEARCH
RESEARCH PLAN
This study is a
secondary study that will test conjectures consisting of 4 hypotheses. While
the data uses secondary data obtained from the annual report, the selection
uses the purposive sampling method based on the criteria needed to obtain the
data.
Population and Sample
The population of this study is
Property, Real Estate and Building Construction Sector Companies listed on the
Indonesia Stock Exchange. The data used is secondary data with the research
time is 2019-2021 on property, real estate, and building construction
sector companies �listed on the Indonesia Stock Exchangea.
���������������������������������������������������������������
Table 3
Research Samples
|
No |
Information |
Sum |
|
1. |
Property, real estate, and building construction sector companies
listed on the Indonesia Stock Exchange (IDX) during the 2019-2021 period |
83 |
|
2. |
Companies with inactive shares traded between the period 2019-2021 |
(14) |
|
3. |
Companies that decide not to distribute dividends between the
2019-2021 period |
(20) |
|
4. |
Companies that suffered losses in the 2019-2021 period |
(20) |
|
5. |
Companies that do not use Rupiah in financial statements in the
2019-2021 period |
(2) |
|
6. |
Number of samples used |
27 |
|
7. |
Observation period during 2019-2021 |
3 |
|
8. |
Total samples used in the study |
81 |
OPERATIONAL DEFINITION OF VARIABLES AND MEASUREMENTS
Dividend policy
Dividend policy is a decision
whether the profit earned by the company will be distributed to investors in
the form of dividends or will be held for investment in the future. In this study,
dividend policy was proxied with a dividend payout ratio. Iswahyuni (2018) revealed that the Dividend payout ratio
is a comparison between dividends paid and net profit earned and is usually
presented in percentage terms. �Dividend
Payout Ratio can be measured by the following formula:
�
Free Cash Flow
Free Cash Flow is the amount of cash flow available to investors (creditors and owners)
after the company has met all operating needs and is paid for investment in net
fixed assets and current assets (Prasetio and Suryono,
2016):
�
Return On Asset (ROA)
�Profitability is the
ability of an enterprise to make a profit on invested capital. This study
proxies the company's profitability with Return on total Assets (ROA). Return
On Asset (ROA) is the profitability ratio to calculate the effectiveness of a
company ROA expressed as a comparison of net profit (after tax) to total assets
(Iswahyuni, 2018)
Profitability�� =���������������� 
Collateralizable
Assets
Collateralizable Assets is the ratio of fixed assets to total assets which is considered a proxy
for collateral assets (collateral) for agency costs that occur due to conflicts
between shareholders and creditors. Collateral assets are measured by the ratio
of net fixed assets to total assets in the consolidated financial position statements.
According to Arfan & Maywindlan
(2013) This ratio is proxied by:
Debt Policy
According to (Permana,
2016), the company's debt policy is a policy taken by the management in order
to obtain sources of financing (funds) from third parties to finance the
company's operational activities. Debt to equiiy ratio
is the ratio between total debt and equity in a company that provides an
overview of the comparison between total debt and the company's own capital
(equity). Debt policy is measured using the debt to equity
ratio, which is the ratio of total debt to total equity that reflects
the extent to which the company uses debt compared to its own capital. Based on
the description above, the debt policy is proxied with a leverage ratio using
the Debt toEquity Ratio (DER):
�
DATA ANALYSIS METHODS
�������� This study tested the hypothesis using
multiple regression analysis and using the EVIEWS tool. Multiple Linear
Regression Analysis Hypothesis testing in this study used multiple linear
regression analysis. Multiple linear regression analysis is a method for
testing used to determine whether or not there is a functional relationship or
a causal relationship between independent variables and dependent variables
(Ghozali,2016). The multiple linear regression method in this study has a
model, namely:
Dividend Policy =
α + β1 Free Cash Flow+
β2 Profitability + β3
Collateralizable Assets + β4Debt Policy + e
�������� Determination of Model
Estimation Model estimation atas regression using
panel data, namely by determining the best model through 3 (three) tests,
namely Common Effect or Pooled Least Square (PLS), Fixed Effect Model (FEM),
and Random Effect Model (REM). The determination of the best model was carried
out using chow test, thirst test, and Lagrange Multiplier. The three tests are
looked at the degree of probability so that the best model can be determined
whether it is a common effect, or a fixed effect model, or a random effect
model. The lagrange multiplier test is only used when
the chow test and the hausman test show different
results. The chow test shows the right model to use is common effect while the hausman test shows the right model to use is random effect.
Testing using a lagrange multiplier is needed to
determine which of the two models is the most appropriate to use. If the
results of the chow test and the hausman test show
the same result, then the lagrange multiplier test
does not need to be done. Hypothesis Test The hypothesis testing technique used
to determine whether there is a significant influence of free variables on
company values with the F Statistical Test and the T Statistical Test which
uses a significance level of 0.05 (α = 5%). Testing of the quality of the
model in this study using adj R2 and simultaneous static test (F test), to see
the test results of the hypothesis given based on the results of the
Significant Individual Parameters test (Statistical Test t). Decision-making on
the statistical test F and the statistical test t can be done by looking at
their significant value at a confidence level of 0.05. If the significant value
is > 0.05 then the independent variable has no significant effect on the
dependent variable, while if the significant value is < 0.05 then the
independent variable has a significant effect on the dependent variable.
RESULT AND DISCUSSION
Descriptive
statistics are used to describe or describe a data viewed from a statistical
point of view in the form of mean, median, mode, standard deviation, maximum
and minimum values of each variable. Based on the descriptive analysis that has
been carried out by the researcher, the following results were obtained:
Table 4
Descriptive Statistics
|
|
DPR |
FCF |
LIKE |
THE |
PROFIT |
|
Mean |
0.270988 |
0.056543 |
0.176173 |
0.271358 |
0.049570 |
|
Median |
0.090000 |
0.030000 |
0.080000 |
0.450000 |
0.032053 |
|
Maximum |
3.230000 |
0.430000 |
0.860000 |
3.480000 |
0.382095 |
|
Minimum |
0.000000 |
0.000000 |
0.000000 |
-21.06000 |
0.000120 |
|
Std. Dev. |
0.511531 |
0.078885 |
0.231962 |
2.759302 |
0.069787 |
|
Observation |
81 |
81 |
81 |
81 |
81 |
�Source: Eviews 9 Data Processing Results
The results of the descriptive
statistical test show that the dividend
policy variable has a minimum value of 0.00 0017 owned by PT Duta Anggada Realty Tbk in 2020 and a
maximum value of 3.23 owned �by PT Plaza Indonesia Realty Tbk in 2019� . The
average dividend paid on net profit earned in the sector of the company studied
was 0.0900 and the standard deviation was 0.511 As for the standard deviation
value that was greater than the average value, it showed varying data.
Next, the free cash flow variable has a minimum value of 0.0 00 owned by PT Aksara Global Development Tbk in
2020 and a maximum value of 0.43 owned by PT Puradelta
Lestari Tbk in 2020. The average amount of cash flow available after the
company has met all operating needs in the company sector under study is
0.0565 and the standard deviation is 0.07. As for the standard deviation value
greater than the average value, it shows that the data varies.
Next, the profitability variable has a minimum value of 0.0 00121 owned by PT
Bumi Citra Permai Tbk, in 2021 and a maximum value of 0.382 owned by PT Duta Anggada Realty Tbk in 2019. The
average amount of profitability available in the company sector studied was 0.0565 and the
standard deviation was 0.07.� As for the
standard deviation value greater than the average value, it shows that the data
varies.
Next, the collateralizable assets variable has a minimum value of 0.00 0 1
which is owned by PT Agung Semesta Sejahtera Tbk in 2021 and a maximum value of 0.86 owned by PT Plaza
Indonesia Realty Tbk in 2019. The average collateral assets in the company
sector studied were 0.1762 and the standard deviation was 0.2319. �As for the standard deviation value greater
than the average value, it shows varied data.
Next, the debt policy variable has a minimum value of -21.0600 owned by PT
Binakarya Jaya Abadi Tbk in
2021 and a maximum value of 3.48 owned by PT Megapolitan Developments Tbk in 2020. The
average company using debt compared to its own capital in the company sector
studied was 0.049570 and the standard deviation was 0.069. �As for the standard deviation value greater
than the average value, it shows varied data.
Selection of Panel Data Regression Models.
In order to select a panel data
regression model between fixed effect model, common effect model, and random
effect model, this study will use the Chow, Hausman and Lagrange Multiplier
tests for further analysis. After testing the fixed effect model and common
effect model, the test results in �Table 5 and �Table 6 with Chow and Hausman tests showed
that the fixed effect model on panel data regression is the best model to
determine the effect of free cash flow,
profitability, collateralizable assets and debt
policy �on dividend policy in �the property, real estate, and building
construction sector companies listed on the Indonesia Stock Exchangea. The Lagrange Multiplier test is not applied in
the selection of this model.
Table 5
Fixed Effect Model (Uji Chow)
|
Effects Test |
Statistic |
D.F. |
Prob. |
|
Cross-section F |
3.229599 |
(26,50) |
0.0002 |
|
Cross-section Chi-square |
79.832774 |
26 |
0.0000 |
Source: Eviews 9 Data
Processing Results
This test is
carried out to select a better or suitable model for estimating panel data
between the Pooled Least Square Model (Common Effect Model) and the Fixed
Effect Model. From the results of the Chow test, a probability value of 0.0000
or less than 0.05 was obtained. This means that Ho is rejected or the best
model used is the Fixed Effect Model.
Table 6
Common Effect Model (Uji Hausman)
|
Test Summary |
Chi-Sq. Statistic |
Chi-Sq. d.f. |
Prob. |
|
Cross-section random |
21.095234 |
4 |
0.0003 |
Source: Eviews 9 Data
Processing Results
This test aims
to select the right model to estimate panel data between the Fixed Effect Model
or Random Effect Model. Hausman's test results showed a probability value of
random cross section of 0.0000 or less than 0.05 so Ho was rejected. This shows
that the best model used is the Fixed Effect Model.
Table 7
Hypothesis Test Results
|
Variable |
Coefficient |
Std. Error |
t-Statistic |
Prob. |
Conclusion |
|
C |
0.109148 |
0.039645 |
2.753148 |
0.0082 |
|
|
FCF |
0.310295 |
0.117155 |
2.648594 |
0.0108 |
H1 accepted |
|
PROFIT |
-2.011772 |
0.530175 |
-3.794545 |
0.0004 |
H2 rejected |
|
LIKE |
1.348419 |
0.356530 |
3.782066 |
0.0004 |
H3 accepted |
|
THE |
0.023819 |
0.003899 |
6.108953 |
0.0000 |
H4 rejected |
Source: Eviews 9 Data
Processing Results
Effect of Free Cash Flow on Dividend Policy
Based on the test results in
Table 7 above, it shows that the probability of the Free Cash Flow variable is below 0.05 and the coefficient value is 0.310295 which means that Free Cash Flow has a significant positive effect on dividend
policy. That is, the more cash a company increases, the higher the dividend
policy carried out. This is in line with research conducted by Deviyanti and Riyanto (2021)
which shows that free cash flow has a
significant positive influence on dividend policy.
This hasil
shows that in accordance with the t eori agentsi states that the conflict of interest that
occurs within the managers and owners of capital, especially companies with substantial
free cash flow. If there is high free cash flow available, then the
manager will increase the amount of his dividend to be paid to be able to
reduce conflicts that can occur. Companies engaged in the property, real
estate, and building construction sectors that have free cash flow
will distribute it to financiers, namely dividends to improve the company's
performance. Managers will use the free cash as a dividend payment to avoid
negative investments that adversely affect a company, with the availability of
free cash flow will increase dividends for stock growers.
Effect of Profitability
on Dividend Policy
Based on the test results in
Table 7 above, it shows that the probability of variable profitability is below
0.05 and the coefficient value is -2.011772 which means that profitability has
a significant negative effect on dividend policy. That is, the higher the profit that the company achieves, the lower the dividend
distribution. �However, based on the hypothesis that
profitability has a positive effect on dividend policy, h2 is rejected. �This indicates that ROA does not
have an effect on dividend distribution. It is assumed that a mature or mature
company already has a lot of profit reserves that can be used, either to be
reinvested or distributed in the form of dividends, without having to change
the proportion of dividends for shareholders. Thus, a mature or mature company
does not depend on the amount of ROA obtained by the company. Companies with
high profitability will have a large investment opportunity and the company
will choose to allocate it into retained earnings in order to make profitable
investments with the aim of being able to continue to makeprofits and increase the value of the company. �Hail this research is not in line
with the research conducted by Ahmad & Wardani,
2014; Mardiyati et al., 2014; Wijaya & Felix,
2017. However, the results of this study are in line with research conducted by
Nurwulansari & Rikumahu
(2018) and Tumiwa & Mamuaya (2019) which found that
Return On Asset (ROA) negatively affects dividend
policy
Effect of Collateralizable
Assets on Dividend Policy
The results of the t test show
that the probability of the Collateralizable Assets variable �is �below 0.05 and the coefficient value is 1.3484199
which means that Collateralizable Assets
have a significant positive influence �on dividend policy �so that diterima
. �This hasil is in line with the
research of Deviyanti and Riyanto
(2021) which shows that collateralizable assets have a positive effect on dividend policy.
Likewise, in Lubis's research (2017), it shows that collateralizable assets have a positive impact on dividend policy.
The results of this study are in line with the theory of collateralizable assets and the �grand theory in this study, namely "agency theory" where it is said that looking at the large number of asset
guarantees will reduce conflicts between financiers and executives because the
company will not be given a limit by creditors regarding dividend payments. The
findings of this study show that the size of assets that can be pledged has a
significant effect on the size of dividend payments because judging from the
characteristics of the company, the sample of this study is a large company and
creditors also pay great attention to assets that can be pledged in determining
whether to provide loans. Thus, pledgeable assets are
one of the main tolls used by management to determine the amount of dividends to be distributed.
Effect of Debt Policy on Dividend Policy
From the results of the t test above,
it shows that the probability of the Debt Policy variable is below 0.05 and the
coefficient value is 0.023819 which means that the Debt Policy has a
significant positive effect on dividend policy. That is, the higher the company's
debt ratio, the lower the dividend distribution. However, based on the
hypothesis that the debt policy negatively affects the dividend policy, h4 is
rejected. �Itwas
concluded that the Debt Policy (DER) did not negatively affect the Dividend
Policy (DPR). �These results do not
support the research conducted by Sejati et al (2020)
and Ginting and ��Munawarah (2018),
but these results are in line with research conducted by Kristian and Viriany (20 21) which shows that debt policy has no
significant effect on dividend policy.
This does not support signaling theory where the size of dividend payments indicates a certain signal for
shareholders. �This is because the
greater the debt equity ratio owned by the company, which is identified with a
large debt value, has no effect on the dividend policy of a company. The
absence of debt on dividend policy due to the company's commitment to make
dividend payments regularly causes the ability to pay dividends not to be
affected by the size of the company's debt. Dividend distribution is the
company's consistency with shareholders by prioritizing the distribution of
company profits in the form of more stable dividends as well as a sign of the
company's success in recording profits. So that the size of a company's
leverage ratio will not affect its devidend payout
ratio (Lestari & Sulistyawati, 2017).
CONCLUSION
The results of this study show that:
Free cash flow has a positive effect on
dividend policy
Profitability has a non-positive effect on dividend policy
Collateralizable
assets have a positive effect on dividend
policy
Debt Policy does not have a positive effect on
dividend policy
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Copyright holders:
Marieta Ariani,
Rakendro Wijayanto, Tyas Pambudi Raharjo,
Hasnawati, Oktaviani (2023)
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