The Effect Of Financial Ratios On Dividend Policies With Company Size As Moderating Variables In Property, Real Estate And Building Construction Companies Listed On The Indonesia Stock Exchange

Feb 27, 2025 by ADMIN 194 views

The Effect of Financial Ratios on Dividend Policies with Company Size as Moderating Variables in Property, Real Estate, and Building Construction Companies Listed on the Indonesia Stock Exchange

Introduction

The property, real estate, and building construction sectors are highly competitive and dynamic, with companies constantly seeking ways to optimize their financial performance and increase shareholder value. One key aspect of financial management is dividend policy, which refers to the distribution of profits to shareholders. In this context, understanding the factors that influence dividend policies is crucial for company managers and investors. This study aims to analyze the effect of financial ratios on dividend policies in property, real estate, and building construction companies listed on the Indonesia Stock Exchange, with a focus on company size as a moderating variable.

Background

Financial ratios are widely used to evaluate a company's financial performance and position. They provide insights into a company's liquidity, profitability, efficiency, and solvency. In the context of dividend policies, financial ratios can influence a company's decision to distribute profits to shareholders. For instance, a company with high liquidity may be more likely to distribute dividends, while a company with high debt levels may be less likely to do so. In addition, company size can also play a role in determining dividend policies, as larger companies may have more resources and greater stability in terms of liquidity and debt.

Methodology

This study uses a panel data regression analysis to examine the relationship between financial ratios and dividend policies in property, real estate, and building construction companies listed on the Indonesia Stock Exchange. The analysis is based on a sample of 39 companies with a total of 195 observations, covering the period from 2012 to 2016. The financial ratios used in this study include cash ratio, debt to equity ratio, return on assets, and price earning ratio. The study also explores the role of company size as a moderating variable in the relationship between financial ratios and dividend policies.

Results

The results of the panel data regression analysis show that simultaneously, financial ratios (cash ratio, debt to equity ratio, return on assets, and price earning ratio) have a significant influence on dividend policies. However, when the analysis was carried out partially, only cash ratio showed a significant positive influence on dividend policy. This finding confirms the importance of liquidity in decision making related to the distribution of dividends by the company. Furthermore, company size is also found to have the ability to moderate the relationship between financial ratios and dividend policy. This means that a larger company may have better resources and greater stability in terms of liquidity and debt, which in turn will influence their decisions in providing dividends to shareholders.

Discussion

The findings of this study provide important insights for company managers and investors to understand how the financial ratio and company size can interact with each other in determining dividend policies. The study highlights the importance of liquidity in decision making related to the distribution of dividends by the company. In addition, the study shows that company size can play a role in moderating the relationship between financial ratios and dividend policies. This means that larger companies may have better resources and greater stability in terms of liquidity and debt, which in turn will influence their decisions in providing dividends to shareholders.

Conclusion

In conclusion, this study provides a comprehensive analysis of the effect of financial ratios on dividend policies in property, real estate, and building construction companies listed on the Indonesia Stock Exchange. The study highlights the importance of liquidity in decision making related to the distribution of dividends by the company. In addition, the study shows that company size can play a role in moderating the relationship between financial ratios and dividend policies. This study provides important insights for company managers and investors to understand how the financial ratio and company size can interact with each other in determining dividend policies.

Recommendations

Based on the findings of this study, the following recommendations are made:

Optimize financial ratios: Companies should focus on optimizing their financial ratios, particularly liquidity, to improve their ability to distribute dividends to shareholders.
Consider company size: Companies should consider their size when making decisions related to dividend policies, as larger companies may have better resources and greater stability in terms of liquidity and debt.
Monitor financial performance: Companies should regularly monitor their financial performance to ensure that they are able to distribute dividends to shareholders.
Investor confidence: Companies should focus on increasing investor confidence by providing transparent and consistent dividend policies.

Limitations

This study has several limitations. Firstly, the study is based on a sample of 39 companies, which may not be representative of the entire property, real estate, and building construction sectors. Secondly, the study uses a panel data regression analysis, which may not capture the complexity of the relationship between financial ratios and dividend policies. Finally, the study does not consider other factors that may influence dividend policies, such as industry trends and market conditions.

Future Research Directions

This study provides a foundation for future research on the effect of financial ratios on dividend policies in property, real estate, and building construction companies listed on the Indonesia Stock Exchange. Future studies could explore the following research directions:

Other factors influencing dividend policies: Future studies could examine the role of other factors, such as industry trends and market conditions, in influencing dividend policies.
Company size and dividend policies: Future studies could investigate the relationship between company size and dividend policies in more detail.
Financial ratios and dividend policies: Future studies could explore the relationship between financial ratios and dividend policies in more detail, including the impact of different financial ratios on dividend policies.

Conclusion

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the effect of financial ratios on dividend policies in property, real estate, and building construction companies listed on the Indonesia Stock Exchange, with a focus on company size as a moderating variable.

Q: What are the financial ratios used in this study?

A: The financial ratios used in this study include cash ratio, debt to equity ratio, return on assets, and price earning ratio.

Q: What is the significance of liquidity in decision making related to dividend policies?

A: Liquidity is a crucial factor in decision making related to dividend policies. A company with high liquidity is more likely to distribute dividends to shareholders, as it has the ability to meet its short-term obligations.

Q: How does company size affect the relationship between financial ratios and dividend policies?

A: Company size can play a role in moderating the relationship between financial ratios and dividend policies. Larger companies may have better resources and greater stability in terms of liquidity and debt, which in turn will influence their decisions in providing dividends to shareholders.

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

A: The findings of this study provide important insights for company managers and investors to understand how the financial ratio and company size can interact with each other in determining dividend policies. Companies should focus on optimizing their financial ratios, particularly liquidity, to improve their ability to distribute dividends to shareholders.

Q: What are the limitations of this study?

A: This study has several limitations. Firstly, the study is based on a sample of 39 companies, which may not be representative of the entire property, real estate, and building construction sectors. Secondly, the study uses a panel data regression analysis, which may not capture the complexity of the relationship between financial ratios and dividend policies.

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

A: This study provides a foundation for future research on the effect of financial ratios on dividend policies in property, real estate, and building construction companies listed on the Indonesia Stock Exchange. Future studies could explore the following research directions:

Other factors influencing dividend policies: Future studies could examine the role of other factors, such as industry trends and market conditions, in influencing dividend policies.
Company size and dividend policies: Future studies could investigate the relationship between company size and dividend policies in more detail.
Financial ratios and dividend policies: Future studies could explore the relationship between financial ratios and dividend policies in more detail, including the impact of different financial ratios on dividend policies.

Q: What are the practical implications of this study for companies in the property, real estate, and building construction sectors?

A: The findings of this study provide practical implications for companies in the property, real estate, and building construction sectors. Companies should focus on optimizing their financial ratios, particularly liquidity, to improve their ability to distribute dividends to shareholders. In addition, companies should consider their size when making decisions related to dividend policies, as larger companies may have better resources and greater stability in terms of liquidity and debt.

Q: What are the future directions for research on dividend policies in the property, real estate, and building construction sectors?

A: The future directions for research on dividend policies in the property, real estate, and building construction sectors include:

Examining the impact of industry trends and market conditions on dividend policies: Future studies could investigate the impact of industry trends and market conditions on dividend policies in the property, real estate, and building construction sectors.
Investigating the relationship between company size and dividend policies: Future studies could investigate the relationship between company size and dividend policies in more detail.
Exploring the impact of different financial ratios on dividend policies: Future studies could explore the relationship between financial ratios and dividend policies in more detail, including the impact of different financial ratios on dividend policies.