THE ROLE OF DIVIDEND
POLICY AS AN INTERVENING OF FINANCIAL PERFORMANCE ON COMPANY VALUE
Mia Laksmiwati, Rinny Meidiyustiani*, Retno Fuji
Oktaviani, Sugeng Priyanto
Faculty of Economics and
Business, Universitas Budi Luhur, Jakarta, Indonesia
Email:
[email protected]*
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Article
Information |
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ABSTRACT |
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Received:
December 21, 2022 Revised:
December 30, 2022 Approved:
January 12, 2023 Online:
January 26, 2023 |
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When investors want to invest in a stock on the
stock exchange, the first thing to look at, apart from the company's
fundamental performance, is the stock price. One of the ratios that is widely
used in making investment decisions is the ratio of stock prices to the
company's book value (Price To Book Value). The book value of the company is
the value of the company's assets divided by the number of shares issued by
the company. In other words, the book value of the shares is the fair value
of the issuer's shares, which reflects the company's fundamental performance.
This study aims to determine the effect of Firm Size, Financial Leverage,
Economic Value Added, Market Value Added on Price to Book Value with Dividend
Payout Ratio as an intervening variable. The research subjects are companies
that are members of IDX 30 on the Indonesia Stock Exchange during the
2017-2021 period. The method of data analysis is multiple linear regression
using R Studio software. The results showed that Firm Size had an effect on the
Dividend Payout Ratio. While Financial Leverage, Economic Value Added, Market
Value Added have no effect on the Dividend Payout Ratio. Financial Leverage
and Market Value Added have an effect on Price to Book Value, but Firm Size
and Economic Value Added have no effect on Price to Book Value. Dividend
Payout Ratio is only able to mediate Firm Size on Price to Book Value. |
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Keywords |
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Firm Size; Financial Leverage; Economic Value Added;
Market Value Added; Dividend Payout Ratio; Price to Book Value |
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INTRODUCTION
The
capital market plays an important role in increasing the economic growth of a
country. Through the capital market, the public can invest in shares with the
aim of getting a return or expected level of profit that is greater than the
funds that have been invested. Profits such as dividends and capital gains can
increase investor satisfaction. However, in reality, stock prices do not always
increase, which causes a decrease in Return. Stock prices often change
according to the level of supply and the level of demand. On the other hand,
investing in stock instruments has risks that result in losses, namely Capital
Loss caused by fluctuations in stock prices. Therefore, as consideration for
potential investors who will invest, they need relevant information about the
company's financial performance. Because the company's financial performance
can predict the company's development or vice versa.
In
investing, stock prices are an important element for an investor. In companies
that have gone public, the value of the company is equal to the stock price,
this will increase the value of the issuer of the company. If the stock price
of the company increases, the value of the company is high. Conversely, if the
share price of the company decreases, the value of the company decreases, this
will have an impact on decreasing shareholder wealth.
On the Indonesia Stock Exchange, companies
are grouped into forty stock indices. One of them is the IDX30, an index that
measures the price performance of 30 shares of companies that have high
liquidity and large market capitalization and are supported by good company
fundamentals. This aims to be an indicator that reflects the condition of
market players, as a reference or basis for investment products, measuring the performance
of investment products. Modeling measurement of return on investment (Return)
can be used to calculate systematic risk and risk-adjusted performance of a
portfolio, as well as a tool to proxy asset allocation www.idxchannel.com.
%20170-180.fld/image002.png)
Figure 1. Fluctuations
in Share Prices of Companies Joined at IDX30
Source:
IDX Statistics: IDX30, 2022
Based on Figure 1, it can be seen that the
stock prices of companies listed on the IDX30 Index experience an increase or
decrease in stock prices every year, in other words, the graphical movements
fluctuate. Recorded on Tuesday (17/5) at www.idxchannel.com that
the data in the graph in Figure 1 the IDX30 index strengthened 1.18% to IDR
536.73 with an average annual increase of 6.27%. The share price experienced
the highest increase in January 2018 of IDR 616.39. The stock price chart
continues to move up and down and experienced the lowest decline in March 2020
of IDR 344.17.
When investors want to
invest in a stock on the stock exchange, the first thing to look at, apart from
the company's fundamental performance, is the stock price. Of course there will
be questions from a number of investors, is the price of the issuer's shares to
be purchased at a reasonable price or not? One of the ratios that is widely
used in making investment decisions is the ratio of stock prices to the
company's book value (Price To Book Value). The book value of the company is
the value of the company's assets divided by the number of shares issued by the
company. In other words, the book value of the shares is the fair value of the
issuer's shares, which reflects the company's fundamental performance.
In line with stock
price movements, it can be seen from Figure 2, the Price Book Value of
companies that are members of the IDX 30 has experienced a downward trend over the last 5 years.
%20170-180.fld/image003.png)
Figure 2. Price Book Value Fluctuations
of Companies Incorporated in IDX30.
Source:
IDX Statistics: IDX30, processed 2022
Investors
certainly have a desire to buy shares at a low price or those with a Price to
Book Value (PBV) < 1. This PBV value is used to assess the price of the
shares offered by the company, whether they are expensive or cheap. If the PBV
value is > 1, then it is certain that the stock price is expensive, and vice
versa. The Price To Book Value (PBV) indicator is used to show how far a
company is able to create corporate value relative to the amount of capital
invested, the higher the ratio the more successful the company is in creating
value for shareholders. By knowing the PBV ratio, investors can identify which
stocks are reasonably priced, undervalued and overvalued. There
are many factors that can determine the value of the company (Wijaya, 2022).
In
this study, the level of PBV is influenced by financial
performance as reflected in various types of financial ratios, which are
measured by Firm Size, Financial Leverage, financial performance based on value
creation (Economic Value Added and Market Value Added). Dividend Payout Ratio
and focuses on companies that are members of IDX 30 on the Indonesia Stock
Exchange.
Hypothesis
Development
1) Effect
of Firm Size on Firm Value
Firm
Size is considered capable of influencing the value of the company, because the
larger the size or scale of the company, the easier it will be for companies to
obtain funding sources, both internal and external. Company size is a
reflection of the assets owned by a company. Companies that have a larger size
have an influence on increasing profitability and firm value, that company size
has a positive effect on firm value (Baha, 2021). Also
strengthens that Firm Size and Capital Structure have a significant positive
effect on firm value (Pratama & Wiksuana, 2018).
H1: Firm Size effect on Price
Book Value
2) Effect
of Financial Leverage on Firm
Value
Financial
Leverage, in this study is proxied by
the Debt to Equity Ratio. Leverage shows the ability of a company to fulfill
all financial obligations of the company if the company is liquidated. The
greater the leverage, the greater the investment risk. Companies with low
leverage ratios have a smaller leverage risk. With a high leverage ratio, it
indicates that the company is not solvable, meaning that its total debt is
greater than its total equity, which functions as a guarantor for its debts. Current assets, return on
assets, firm size and debt to equity ratio have an effect on price to book
value, while the dividend payout ratio and asset growth have no effect on price
to book value (Hidayat, 2018). This is reinforced, stating that DER has a positive
and significant effect on company value (Badjra, 2018).
H2: Financial
Leverage effect on Price
Book Value
3) Effect
of Economic Value Added on Firm Value
Economic Value Added (EVA) is a relatively new financial analysis tool for assessing company performance from a financial perspective. In contrast to traditional accounting performance measurement, EVA tries to measure the value added (value creation) generated by a company by reducing the cost of capital that arises as a result of the investments made. The approach with financial analysis approach to Economic Value Added (EVA), Financial Value Added (FVA) and Market Value Added (MVA) is one of the relevant financial performance measurement tools used to see the extent to which the company's effectiveness in returning on investment is carried out by the company using a measure of performance seen from the added value (Value Based) (Cahyandari et al., 2021).
The higher the EVA, FVA and MVA, the greater the potential earnings per share so that the higher the stock price will affect the value of the company. This is in accordance with the results of which produces Economic Value Added (EVA), Market Value Added (MVA), dividend policy and managerial ownership have a significant effect on firm value (Sani & Irawan, 2021). Currently prove that Economic Value Added (EVA) has a negative effect on firm value (Dewi et al., 2021).
H3: Economic
Value Added effect
on Price Book Value
4) Effect of Market
Value Added on
Firm Value
Modern
financial performance in addition to EVA which is associated with the market is
also measured by Market Value Added (MVA) which is the market value of the
stock compared to its book value. MVA is the difference between the market
value of a company's equity and the book value as presented in the balance
sheet. The market value is calculated by multiplying the share price by the
number of outstanding shares. So, MVA is the difference between the market
value of the stock and its own capital paid up by the shareholders. Investors
certainly really hope that the MVA will be higher so that the expected return
will also increase, so that the company's value will increase, according to
research results,
partially EVA has no significant effect on firm value, while MVA has a
significant effect on firm value (Gustisari, 2021). This is supported that Market Value Added has a significant effect while Debt to Equity
has no effect on firm value (Suharna et
al., 2021) and strengthen (EVA) and
(MVA) together explain the changes that occur in the value of the company (Mikrad & Syukur, 2019).
H4:
Market Value Added effect on Price
Book Value
5) Effect
of Firm Size on Dividend Policy
Company size is a scale that is calculated by the level of
total assets or sales. Companies with a larger scale will have an advantage in
the source of funds obtained to finance their investment in obtaining profit.
Company size can be used to represent the company's financial characteristics.
Large companies that are well established will find it easier to obtain capital
in the capital market compared to small companies. Because that ease of access
means larger companies have greater flexibility. With the ability to source
large funds, the opportunity to earn profits is also large so that the
potential for dividend distribution can increase, according to research results
,Firm size has a positive effect on dividend policy (Tinangon, 2022). Study how’s Firm size has an effect on dividend payout ratio
(Amah &
Prasetyowati, 2019).
H5: Firm Size effect on
Dividend Policy
6) Effect
of Financial Leverage on Dividend
Policy
Financial leverage is the relationship between the
amount of money owned by a company and the value of the company, in other
words, financial leverage shows how big the proportion of debt to equity is.
The higher it is, the higher the risk, because funding from the element of debt
creates a fixed burden, in the form of interest expense and debt repayment. If
this condition occurs, the company's profit will be smaller, so that the
dividend will be small, which will not attract stock investors. Research result
shows that Financial Leverage
and company size have a significant influence on dividend policy (Febrianti &
Zulvia, 2020).
While the research results shows that leverage and profitability have a
significant effect on dividend policy. Profitability and dividend policy have a
significant effect while leverage has no significant effect on firm value (Sari et al., 2022).
H6: Financial Leverage effect on
Dividend Policy
7) Effect
of Economic Value Added on Dividend Policy
Economic
Value Added (EVA) is a financial performance measurement tool whose measurement
is based on the difference between the company's return on capital and the cost
of capital. This EVA concept will be created if the company makes a profit
(profit) above the company's cost of capital. Companies that have high EVA tend
to attract more investors to invest in these companies, because the higher the
EVA, the higher the value of the company. The greater the Economic Value Added
will attract stock investors because the hope of getting greater returns has
the potential to materialize, because companies that earn greater profits will
generally also pay out larger dividends. Research result proves Economic Value Added (EVA) has a positive and
significant effect on dividend policy (Khasanah et al., 2019). This is reinforced by the test results showing that
EVA has a positive effect on cash dividend policy (Marleadyani et al.,
2016).
H7: Economic Value Added
effect
on Dividend Policy
8) Effect
of Market Value Added on Dividend Policy
Not unlike the
Economic Value Added, the higher the Market Value Added level indicates that
the company is able to show optimal financial performance and the opportunity
for dividend distribution will be greater. MVA is also considered capable of
being used as a measuring tool as well as an assessment of the increase in
wealth for the company's shareholders. MVA can certainly be an objective
instrument as a good determinant of the level of shareholder wealth. This is shows that market ratio has a significant negative effect on
dividend policy, liquidity has a significant negative effect on dividend
policy, and profitability has an insignificant positive effect on dividend
policy. Companies with high market ratios, liquidity, and profitability do not
necessarily provide high dividends (Anggoro
et al., 2022).
H8: Market
Value Added effect on
Dividend Policy
9) Effect
of Dividend Policy on Firm
Value
Dividend
policy is a practice carried out by company management in making dividend
payment decisions, which includes the amount of rupiah, the cash distribution
system to shareholders. Dividend payment is measured by dividing the amount of
dividend per share by net income per share. If this ratio is getting bigger, it
shows that the dividends distributed to shareholders are getting bigger, while
the retained earnings are getting smaller. On the one hand, it meets the
expectations of shareholders, but on the other hand, additional funds that are
quite efficient are reduced. Profitability ratios and dividend
payout ratios have a negative effect on firm value. Leverage, liquidity ratio,
market ratio, value added economy, market added value and dividend yield have a
positive effect on firm value (Vedy et al., 2016). Profitability, dividend payout has a significant
positive effect on firm value and profitability has a significant positive
effect on dividend payout. Dividend payout still has a role in increasing firm
value because dividend payout has a direct and significant positive effect on
firm value. However, different results are shown (Sudarman, 2021). Financial performance (ROA)
has a negative and significant effect on firm value, investment decisions (PER)
and dividend policy have no effect on firm value, financial performance and
investment decisions have a positive and significant effect on dividend policy,
and partially financial performance and investment decisions have influence on
firm value with dividend policy as an intervening variable (Adrianingtyas, 2019).
Currently researching,
shows dividend policy and debt policy independently have a significant positive
effect on firm value (Hanna, 2022).
H9: Effect of Dividend
Policy on Firm Value
METHODS
This study uses
multiple linear regression analysis with moderating variables. Statistical
analysis tool using Rstudio Software with queries. The tests carried out
include the Classical Assumption test which consists of a normality test,
multicollinearity test, heteroscedasticity test, autocorrelation test. Then a
hypothesis test was carried out which consisted of a determination test,
correlation test, model feasibility test and t test (Team, 2009).
RESULTS AND DISCUSSION
A. Descriptive
Results Descriptive statistics
can provide an overview of each variable regarding the average value (Mean),
median value, minimum value, and maximum value of the variables studied.
Table 1
Descriptive Statistics
|
UP |
EVA |
MVA |
|||||||||||||
|
Min |
: |
24.65 |
Min |
: |
-1.7E+12 |
Min |
: |
-1.9.E+14 |
|||||||
|
1st
Qu. |
: |
31.14 |
1st
Qu. |
: |
2.2E+11 |
1st
Qu. |
: |
-1.1.E+13 |
|||||||
|
Median |
: |
32.12 |
Median |
: |
8.1E+11 |
Median |
: |
2.4.E+13 |
|||||||
|
Mean
|
: |
31.53 |
Mean
|
: |
1.7E+12 |
Mean
|
: |
3.2.E+13 |
|||||||
|
3rd
Qu. |
: |
32.36 |
3rd
Qu. |
: |
2.8E+12 |
3rd
Qu. |
: |
6.0.E+13 |
|||||||
|
Max |
: |
33.54 |
Max |
: |
6.5E+12 |
Max |
: |
4.2.E+14 |
|||||||
|
FL |
DPR |
PBV |
|||||||||||||
|
Min |
: |
0.18 |
Min |
: |
0.000 |
Min |
: |
0.107 |
|||||||
|
1st
Qu. |
: |
0.55 |
1st
Qu. |
: |
0.362 |
1st
Qu. |
: |
0.802 |
|||||||
|
Median |
: |
0.77 |
Median |
: |
0.516 |
Median |
: |
1.330 |
|||||||
|
Mean
|
: |
0.91 |
Mean
|
: |
0.575 |
Mean
|
: |
6.359 |
|||||||
|
3rd
Qu. |
: |
1.04 |
3rd
Qu. |
: |
0.797 |
3rd
Qu. |
: |
2.973 |
|||||||
|
Max |
: |
3.41 |
Max |
: |
1.624 |
Max |
: |
85.181 |
|||||||
Source:
output Rstudio
1. Normality test
Table 2
Shapiro-Wilk Normality test
|
Shapiro-Wilk
normality test |
|
data: reg1$residual |
|
W = 0.90435, p-value
= 0.1902 |
Source: output Rstudio
Based on the Shapiro-Wilk
test, it produces a p-value of 0.1902 which is greater than the significant
value, namely 0.1902 > 0.05, so it can be said that the data is normally
distributed.
2. Autocorrelation test
Table 3
Autocorrelation test
|
Durbin-Watson test |
|
data: reg1 |
|
DW = 2.1355, p-value
= 0.6971 |
|
alternative hypothesis:
true autocorrelation is greater than 0 |
Source: output Rstudio
The Durbin Watson test
resulted in a p-value greater than a significant value of 0.6971 > 0.05 so
it can be said that there is no autocorrelation in the research variables.
3. Homogenity test
Table 4
Breusch-Pagan Test
|
Breusch-Pagan test |
|
data: reg1 |
|
BP = 17.367, df = 4,
p-value = 0.8211 |
Source: output Rstudio
The Breusch-Pagan test
produced a p-value greater than a significant value of 0.8211 > 0.05 so that
it can be said that the research data is homogeneous and there is no
heteroscedasticity.
4. Multicoliniearity test
Table 5
VIF value
|
UP |
EVA |
MVA |
FL |
|
1.261643 |
1.401263 |
1.45245 |
1.630208 |
Source: output Rstudio
Multicollinearity testing
using VIF value resulted in each independent variable, namely UP, EVA, MVA, FL
having a VIF value < 10, so it can be said that the research data does not
have multicollinearity problems.
5. Goodness of fit test
Table 6
F test
|
Residual
standard eror: 5.957 on 54 degrees of freedom |
|
Multiple
R-squared: 0.8767, Adjusted R-squared: 0.8652 |
|
F-statistics:
76.76 on 5 an 54 DF, p-value: 2.2e-16 |
Source: output Rstudio
The goodness of fit test
using the F test resulted in a p-value of 2.2e-16 which is smaller than the
significant research value of 0.05 and the F-stat value of 76.76 > F table
2.549 so that it can be said that the research model is feasible to use. The
determination value from the table above shows that 86.53% of the variation in
the independent variable is able to explain the dependent variable.
6. Hipotesis test
Table 7
T test
|
Coefficient: |
|
|
|
|
|
|
|
Estimate |
Std. Error |
t value |
Pr(>|t|) |
|
|
(Intercept) |
9.339215 |
5.692156 |
1.641 |
0.106600 |
|
|
UP |
0.006137 |
0.023954 |
0.256 |
0.798700 |
|
|
EVA |
-0.119436 |
0.057698 |
-2.07 |
0.043200 |
* |
|
MVA |
-0.163072 |
0.166395 |
-0.98 |
0.331400 |
|
|
FL |
-0.015508 |
0.070401 |
-0.22 |
0.826500 |
|
|
Signif.
Codes : 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 '' 1 |
|
||||
Source: output Rstudio
a. The
influence of company size on the DPR produces a p-value of 0.7987 > 0.05 so
that the size of the company does not have a significant effect on the DPR..
b. The
influence of EVA on the DPR produces a p-value of 0.0432 <0.05 so that EVA
has a significant influence on the DPR.
c. The
effect of MVA on the DPR produces a p-value of 0.3314 > 0.05 so that MVA
does not have a significant effect on the DPR.
d. The
effect of FL on the DPR produces a p-value of 0.8265 > 0.05 so that FL does
not have a significant effect on the DPR.
Table 8
T test
|
Coefficient: |
|
|
|
|
|
|
|
Estimate |
Std. Error |
t value |
Pr(>|t|) |
|
|
(Intercept) |
429.4625 |
155.5431 |
2.761 |
0.00786 |
|
|
UP |
-0.3740 |
0.6395 |
-0.585 |
0.56107 |
|
|
EVA |
0.6783 |
1.5983 |
0.424 |
0.67297 |
|
|
MVA |
-13.4251 |
4.4781 |
-2.998 |
0.00410 |
** |
|
FL |
16.4753 |
1.8792 |
8.767 |
5.8.E-12 |
*** |
|
DPR |
8.0821 |
3.5976 |
2.247 |
0.02878 |
* |
|
Signif.
Codes : 0 '***' 0.001 '**' 0.01 '*' 0.05 '.' 0.1 '' 1 |
|||||
Source: output Rstudio
a. The
effect of firm size on PBV produces a p-value of 0.561 > 0.05 so that firm
size does not have a significant effect on PBV.
b. The
effect of EVA on PBV produces a p-value of 0.672 > 0.05 so EVA does not have
a significant effect on PBV.
c. The
effect of MVA on PBV produces a p-value of 0.004 <0.05 so that MVA has a
significant effect on PBV.
d. The
effect of FL on PBV produces a p-value of 5.8e-12 <0.05 so that FL has a
significant effect on PBV.
e. The
influence of the DPR on PBV produces a p-value of 0.0287 < 0.05 so that the
DPR has a significant influence on PBV.
7. Multiple Regression Equation
Equation
1 multiple regression based on table 7, as follows:
%20170-180.fld/image005.png){kind=small}
a. Constant:
9.3392 means that if all independent variables are 0 then the DPR is 9.3392%.
b. Firm
Size coefficient: 0.006137 means that if the value of EVA, MVA and FL = 0 then
if the firm size increases by 1 then the DPR increases by 0.006137
c. EVA
coefficient: - 0.119436 means that if the value of UP, MVA and FL = 0 and if
EVA increases by 1, DPR decreases - 0.119436
d. MVA
coefficient: - 0.163072 meaning that if UP, EVA and FL = 0 and MVA increases by
1 then DPR decreases - 0.163072
e. FL
coefficient: 0.015508 meaning that if UP, EVA and MVA = 0, and FL increases by
1 then DPR decreases – 0.015508.
Equation
2:
%20170-180.fld/image007.png){kind=small}
%20170-180.fld/image009.png){kind=small}
a.
Constant:
429.4625 means that if all independent variables are 0 then the PBV is 429.4625.
b.
Firm
Size coefficient: - 0.3740 means that if the value of EVA, MVA, FL and DPR = 0
then if the firm size increases by 1 then the PBV decreases by 0.3740
c.
EVA
coefficient: + 0.6783 means that if the value of UP, MVA, FL and DPR = 0 and if
EVA increases by 1, PBV increases by 0.6783
d.
MVA
coefficient: - 13.4251 meaning that if UP, EVA, FL and DPR = 0 and MVA
increases by 1 then PBV decreases by 13.4251
e.
FL
coefficient: 16.4753 meaning that if UP, EVA, MVA and DPR = 0 , and FL
increases by 1 then PBV increases 16.4753.
f.
DPR
coefficient: 8.0821 meaning that if UP, EVA, MVA and FL = 0, and DPR increases
by 1 then PBV increases by 8.0821.
8. Coefficient Path Analysis
Figure
3. Path Analysis Results
Source: output sstudio
B. Hypothesis
Test (Interpretation of Research Results)
1) The
Effect of Firm Size on Firm Value
Firm
Size (company size) has no significant effect on PBV. These results are
different from the research by Adrianingtyas (2019).
The larger the company does not automatically mean the company's value is also
large, because there are other factors that influence it, such as dividend
policy, the company's growth rate.
2) Effect
of Financial Leverage on Company Value
Financial
Leverage has a significant effect on PBV, according to the research of Alawiyah
(2021).
The greater the Financial Leverage reflects the greater the source of funds in
the form of debt, so this is increasingly risky. If the company is unable to
fulfill its obligations, it has the potential to experience financial
difficulties. This condition will reduce the interest of investors to invest in
stocks so that stock prices fall, and company value will follow.
3)
Effect of Economic Value
Added on Firm Value
Economic Value Added does not
have a significant effect on firm value, this result contradicts the results of
research Sudarman (2021).
Even though the company is able to generate positive EVA, there are still other
factors, such as the dividend policy set by the General Meeting of
Shareholders. Dividend distribution will certainly attract potential investors,
so this will affect the value of the company.
4)
Effect of Market Value Added
on Firm Value
MVA
has a significant effect on PBV, according to the results Sani and
Irawan (2021).
MVA is a measure of company performance in terms of profitability. An increase
in this ratio will give hope to shareholders to get a return. A high MVA value
means that the company has been able to maximize shareholder wealth as a result
of good company performance and a high response from the market. As a result,
investor confidence in the company is increasing so that it is possible that it
will increase the demand for company shares, this condition will increase share
prices and company value.
5)
Effect of Firm Size on
Dividend Policy
Company
size does not have a significant effect on the DPR, according to who revealed
that Firm Size has no effect on dividend policy, and Leverage and Profitability
have an effect on dividend policy (Nugroho, 2021).
An established company will have easy access to the capital market to raise
funds at a lower cost, while new and small companies will experience many
difficulties to have access to the capital market. This shows that Firm Size
cannot guarantee, the company will distribute its profits in the form of
dividends.
6)
Effect of Financial Leverage
on Dividend Policy
Financial
Leverage does not have a significant effect on the DPR (Alawiyah et al., 2021).
This means that the high and low value of the company's leverage does not
affect the management in distributing dividends to investors. The higher the
debt will affect the interest costs (debt cost) which has an impact on the
company's net profit. The company will definitely prioritize the obligation to
pay debts rather than paying dividends.
7)
Effect of Economic Value
Added on Dividend Policy
Economic Value Added has a
significant effect on dividend policy. This is the same as the results of the
study (Khasanah et al., 2019).
The greater the EVA, the greater the potential for dividends distributed. This
shows that valuation based on value is important because every investment
cannot be separated from the consequences of the emergence of capital costs as
compensation for the funds used to finance the investment.
8)
Effect of Market Value Added
on Dividend Policy
Market Value Added has no
significant effect on dividend policy. MVA is not able to influence dividend
policy because there are other factors that are more dominant, such as GMS
decisions Sari, et al (2022).
9) The
Effect of Dividend Policy on Firm Value
Dividend policy (Dividend
Payout Ratio) has a significant influence on company value (Price to Book
Value). This is the same as the research by Sudarman
(2021) and Vedy (2016).
Dividend policy with the dividend payout ratio (DPR) shows that the greater the
dividends paid, the company decides to retain profits in a small amount which
causes less funds available for companies to invest. the level of expected
value in the future becomes lower and this can put pressure on the stock price
which in turn will affect the value of the company.
CONCLUSION
The implications of the
results of this study are that; only firm
size can be used as an indicator in determining a company's dividend policy.
While Financial Leverage, Economic Value Added and Market Value Added cannot, and dividend
payout ratio is only able to mediate Firm Size to Firm Value (Price Book
Value).
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