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Dividend Policy and Firm Value in Indonesia: The Moderating Role of Capital Structure

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  • Vriska Mega PRATIWI

    (Universitas PGRI Madiun, Indonesia)

  • Anggita Langgeng WIJAYA

    (Universitas PGRI Madiun, Indonesia)

  • Ratih PARAMITASARI

    (Universitas Terbuka, Indonesia)

Abstract

This study aims to examine the effect of dividend policy on firm value with capital structure as a moderating variable. The research was conducted on manufacturing companies on the Indonesia Stock Exchange in 2016-2019. The purposive sampling technique took the research data. Data analysis used a moderated regression analysis. The findings of this study indicate that the dividend policy increases firm value. However, this analysis demonstrates that the capital structure has a moderating influence on the effect of dividends on firm value. Investors in Indonesia’s capital market have reacted positively to manufacturing businesses’ dividend payout policies. However, if the company’s capital structure is highly leveraged, this reaction will be diminished.

Suggested Citation

  • Vriska Mega PRATIWI & Anggita Langgeng WIJAYA & Ratih PARAMITASARI, 2022. "Dividend Policy and Firm Value in Indonesia: The Moderating Role of Capital Structure," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 3(3), pages 62-72, March.
    • Handle: RePEc:ahd:journl:v:3:y:2022:i:3:p:62-72
    DOI: 10.37945/cbr.2022.03.08
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    References listed on IDEAS

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    More about this item

    Keywords

    firm value; capital structure; dividend; risk; shareholders;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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