Intervining Debt Policy the Effect Free Cash Flow and Investment Opportunity Set to Dividend Policy

Abstract

This study aims to examine the effect of free cash flow and investment opportunity set on dividend policy with debt policy as an intervening variable. This type of research is quantitative causality using the population in this study is a consumer goods industry manufacturing companies listed on the Indonesia Stock Exchange in 2015-2019. The selection of data samples using purposive sampling technique. The analytical method used is path analysis. The results of this study indicate that free cash flow has a positive and significant effect on debt policy, investment opportunity set has no effect on debt policy, free cash flow has a positive and significant effect on dividend policy, investment opportunity set has no effect on dividend policy, free cash flow and investment The opportunity set simultaneously influences the dividend policy, the debt policy does not mediate the effect of free cash flow on the dividend policy and the debt policy does not mediate the effect of the investment opportunity set on the dividend policy.

The Effect of Performance on Dividend Policy Case Study on Indonesian Mining Sector Companies

“…In other words, the higher the free cash flow, the greater the dividends that can be paid to each company. This statement is in line with Sugiyanto et al (2021) explanation that the larger the free cash flow, the higher the dividend payout ratio. The greater the free cash flow available to a company, the stronger the company because the cash in the company that has been provided to pay dividends is also growing.…”

“…The results show that the majority of the companies studied are already mature, meaning that the company's primary focus is on generating profits and distributing them to shareholders. At this mature stage, the company already has a profit reserve that can be used as investment capital without having to reduce the dividend proportion for shareholders (Sugiyanto et al, 2021). 5.…”

“…Free cash flow refers to the cash flow that is available for payment to investors (shareholders or debt owners) after the company invests in fixed assets, new products, and working capital needed to maintain the existing ongoing methods (Sugiyanto et al 2021). The amount of free cash flow generated by each company has shown that each company can engage in activities that can return capital in the form of debt or equity.…”

Pengaruh Free Cash Flow dan Investment Opportunity Set Terhadap Dividen Payout Ratio Pada Perusahaan Manufaktur Yang Terdaftar di BEI tahun 2017-2020

“…Menurut Irfan Muttaqin ( 2018) dalam (Praditya et al, 2020) bahwa investment opportunity set, dan free cash flow tidak mempengaruhi dividend payout ratio. Sedangkan menurut Rizky Atinio Saputro (2019) dalam (Sugiyanto et al, 2021)amenyatakan bahwaafree cash flowaberpengaruh terhadap dividendapayout ratio namunainvestment opportunityaset tidak mempengaruhi dividendapayout ratio.…”