Analysis Of Factors Affecting Dividend Policy With Cash Ratio As Moderating Variables In Consumer Goods Companies On The Indonesia Stock Exchange

Feb 27, 2025 by ADMIN 146 views

Introduction

Dividend policy is one of the most critical decisions made by companies, especially those in the consumer goods sector. The decision to distribute dividends to shareholders can have a significant impact on the company's financial performance and strategy. In this study, we aim to analyze the factors that influence dividend policies in consumer goods companies listed on the Indonesia Stock Exchange during the period 2008 to 2011. Specifically, we examine the impact of Return on Assets (ROA), Return on Equity (ROE), profit, long-term debt, debt to total assets, and current ratios on dividend policies. Additionally, we test the cash ratio as a moderating variable to see its effect on the relationship between these variables and dividend policies.

Research Methodology

The research population consisted of 39 consumer goods companies listed on the Indonesia Stock Exchange. From this population, 12 companies were chosen as samples using the purposive sampling method. The data used in this study were taken from financial statements published on the Indonesia Stock Exchange. Data processing was carried out using several statistical methods, including the Kaiser-Meyer-Olkin (KMO) method, multiple linear regression, and the residual test through the SPSS program.

Research Findings

The results of this study show that the variable ROA, ROE, profit, long-term debt, and debt ratio to total assets have a significant influence on dividend policy. Simultaneously, all of these variables contribute to dividend policies, whereas partially only ROE and current ratios have a significant influence. Interestingly, when the cash ratio was tested as a moderating variable, the results show that the cash ratio does not strengthen the relationship between these variables and dividend policies. This means that cash ratio cannot be considered as a variable that reinforces or modifies the effect of independent variables on dividend policies.

Additional Analysis and Explanation

The dividend policy taken by the company can reflect their financial performance and strategy. ROA and ROE, which show that the company is able to generate good profits from their assets and equity, are likely to distribute dividends to its shareholders. On the other hand, high long-term debt can cause concern for the company's ability to pay their obligations, which in turn can influence the decision to distribute dividends.

The findings that the cash ratio does not function as a moderating variable raise an interesting question about the nature of the liquidity measured by the cash ratio. Although Cash Ratio shows how well the company can fulfill short-term obligations with available cash, it turns out this is not enough to influence dividend decisions when viewed in the context of other more significant variables such as ROA and ROE.

In the context of the consumer goods industry in Indonesia, this can show that companies consider more operational performance and profitability rather than just their cash position when making decisions about dividend distribution. This is important to be understood by investors who invest in this sector, because good dividend policies not only reflect financial health, but also the company's long-term growth strategy.

Conclusion

This study provides in-depth insight into the factors that influence dividend policies in consumer goods companies on the Indonesia Stock Exchange. While ROA, ROE, and Profit are proven to have a significant influence, Cash Ratio does not function as a moderating variable. This discovery can help stakeholders, including investors and company management, in understanding the dynamics of dividend policies that are more complex and make more appropriate decisions in the future.

Implications of the Study

The findings of this study have several implications for investors, company management, and policymakers. Firstly, investors should consider the operational performance and profitability of companies when making investment decisions. Secondly, company management should prioritize dividend policies that reflect the company's financial performance and strategy. Finally, policymakers should consider the impact of dividend policies on the overall economy and develop policies that promote sustainable dividend practices.

Limitations of the Study

This study has several limitations that should be acknowledged. Firstly, the sample size is relatively small, which may limit the generalizability of the findings. Secondly, the study only examines the impact of cash ratio as a moderating variable, which may not capture other factors that influence dividend policies. Finally, the study only focuses on consumer goods companies listed on the Indonesia Stock Exchange, which may not be representative of other industries or markets.

Future Research Directions

This study provides several avenues for future research. Firstly, researchers can examine the impact of other variables, such as market value and book value, on dividend policies. Secondly, researchers can investigate the impact of dividend policies on the overall economy and develop policies that promote sustainable dividend practices. Finally, researchers can examine the impact of dividend policies on different industries and markets.

Conclusion

In conclusion, this study provides in-depth insight into the factors that influence dividend policies in consumer goods companies on the Indonesia Stock Exchange. While ROA, ROE, and Profit are proven to have a significant influence, Cash Ratio does not function as a moderating variable. This discovery can help stakeholders, including investors and company management, in understanding the dynamics of dividend policies that are more complex and make more appropriate decisions in the future.

Q: What is dividend policy?

A: Dividend policy refers to the decision made by a company to distribute a portion of its earnings to its shareholders in the form of dividends. This decision is critical as it can have a significant impact on the company's financial performance and strategy.

Q: What are the factors that influence dividend policy?

A: The factors that influence dividend policy include Return on Assets (ROA), Return on Equity (ROE), profit, long-term debt, debt to total assets, and current ratios. These variables are used to determine the company's ability to generate profits and distribute dividends to its shareholders.

Q: What is the role of cash ratio in dividend policy?

A: The cash ratio is a measure of a company's ability to fulfill its short-term obligations with available cash. In this study, the cash ratio was tested as a moderating variable to see its effect on the relationship between the variables mentioned above and dividend policies. However, the results showed that the cash ratio does not strengthen the relationship between these variables and dividend policies.

Q: Why is it important to consider the cash ratio in dividend policy?

A: The cash ratio is important because it reflects a company's liquidity and ability to meet its short-term obligations. However, the findings of this study suggest that the cash ratio is not a significant factor in determining dividend policies.

Q: What are the implications of this study for investors and company management?

A: The findings of this study have several implications for investors and company management. Investors should consider the operational performance and profitability of companies when making investment decisions. Company management should prioritize dividend policies that reflect the company's financial performance and strategy.

Q: What are the limitations of this study?

A: This study has several limitations that should be acknowledged. The sample size is relatively small, which may limit the generalizability of the findings. The study only examines the impact of cash ratio as a moderating variable, which may not capture other factors that influence dividend policies. Finally, the study only focuses on consumer goods companies listed on the Indonesia Stock Exchange, which may not be representative of other industries or markets.

Q: What are the future research directions based on this study?

A: This study provides several avenues for future research. Researchers can examine the impact of other variables, such as market value and book value, on dividend policies. Researchers can investigate the impact of dividend policies on the overall economy and develop policies that promote sustainable dividend practices. Finally, researchers can examine the impact of dividend policies on different industries and markets.

Q: What are the practical implications of this study for policymakers?

A: The findings of this study have several practical implications for policymakers. Policymakers should consider the impact of dividend policies on the overall economy and develop policies that promote sustainable dividend practices. Policymakers should also consider the impact of dividend policies on different industries and markets.

Q: What are the future implications of this study for the Indonesian economy?

A: The findings of this study have several future implications for the Indonesian economy. The study suggests that companies in the consumer goods industry in Indonesia consider more operational performance and profitability rather than just their cash position when making decisions about dividend distribution. This can have a positive impact on the overall economy by promoting sustainable dividend practices and encouraging companies to prioritize their financial performance and strategy.

Q: What are the future research directions for this study?

Q: What are the limitations of this study for future research?

Q: What are the future implications of this study for the Indonesian stock market?

A: The findings of this study have several future implications for the Indonesian stock market. The study suggests that companies in the consumer goods industry in Indonesia consider more operational performance and profitability rather than just their cash position when making decisions about dividend distribution. This can have a positive impact on the overall stock market by promoting sustainable dividend practices and encouraging companies to prioritize their financial performance and strategy.

Q: What are the future research directions for this study in the context of the Indonesian stock market?

A: This study provides several avenues for future research in the context of the Indonesian stock market. Researchers can examine the impact of other variables, such as market value and book value, on dividend policies. Researchers can investigate the impact of dividend policies on the overall stock market and develop policies that promote sustainable dividend practices. Finally, researchers can examine the impact of dividend policies on different industries and markets in the context of the Indonesian stock market.