Ownership Structure, Capital Structure, and Dividend Policy

Nur Imamah (), Saparila Worokinasih, Tsui-Jung Lin, Fernanda Dewi and Gafar M. Ragap Elganzory
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Nur Imamah: Universitas Brawijaya, Department of Business Administration
Saparila Worokinasih: Universitas Brawijaya, Department of Business Administration
Tsui-Jung Lin: Chinese Culture University, Department of Banking and Finance
Fernanda Dewi: Universitas Brawijaya, Department of Business Administration
Gafar M. Ragap Elganzory: Gulf of Sidra University, Department of Business Administration

A chapter in Proceedings of the Brawijaya International Conference on Business Administration, Taxation, and Tourism (BICBATT 2022), 2024, pp 85-94 from Springer

Abstract: Abstract Dividend policy is an important topic that is always interesting to research. The dividend policy determines the profit distributed to shareholders and the profit reinvested in the company. However, managers have different interests and seek to achieve personal gain and harm shareholders. This study examines the effect of ownership structure, capital structure, and free cash flow on dividend policy. The sample of this study is the companies listed on the Indonesia Stock Exchange from 2017 to 2021 using purposive sampling. The variables of this study consist of dividend payout ratio as the dependent variable and managerial ownership and debt to total asset ratio as the independent variables. Then, the interest variable in this study is the free cash flow ratio which acts as a moderating variable. The study uses panel data analysis from the common effects model of multiple linear regression. The empirical results found that managerial ownership positively and significantly affects the dividend payout ratio. The debt-to-total asset ratio negatively and significantly affects the dividend payout ratio. Surprisingly, the findings of the free cash flow ratio cannot be proven on the influence of both managerial ownership and debt to asset ratio. This study has implication for investors’ interest to invest in getting the dividends they expect from companies in Indonesia. The main value of this paper is the analysis of the effect of ownership structure, capital structure, and free cash flow on dividend policy, and free cash flow is a moderating variable from the Indonesian perspective.

Keywords: Ownership Structure; Capital Structure; Dividend Policy; Free Cash Flow (search for similar items in EconPapers)
Date: 2024
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DOI: 10.2991/978-94-6463-240-8_11

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