Profitability and Dividend Policy Affects Firm Value in The Infrastructure, Utility and Transportation Sector

Abstract

Previous study uses six bank companies which are listed in Indonesia Stock Exchange as the object and using ROE in calculating profitability. The researcher suggests to using a variable other than ROE to calculate profitability, increasing the number of samples and using other sector such as infrastructure, utility and transportation sector as the object. Hence, this study aims to prove the effect of profitability and dividend policy on firm value in the infrastructure, utility and transportation sector. The data were obtained from the financial statements of company listed on Indonesian Stock Exchange. Firm value as a dependent variable were measured by price to book value, profitability and dividend policy as independent variable were measured by return on assets and dividend payout ratio. They were analyzed using Multiple Linear Regression with classical assumption test in Statistical Package for the Social Sciences program. The results indicated that profitability and dividend policy can affect firm value simultaneously, profitability has no effect on firm value while dividend policy can positively affect firm value.

Profitability, Good Corporate Governance, Dividend Policy, and Firm Value at ISSI

“…This will lead to the better value of the company (Fajaria & Isnalita, 2018). This result follows the signaling theory, which states that a company with a high DPR level will signal investors and gain high trust from investors (Kusumawati and Harijono, 2021).…”

“…Then choose an audit committee that is truly independent and can carry out internal supervision of the company because the role of the audit committee is crucial to assist the board of commissioners in supervising the company's internals so that the work environment becomes more conducive and acts of fraud and manipulation can be minimized. Similar research on dividend policy by Kusumawati (2021). The results of this study are in line with the bird in the hand theory, where the high dividends distributed by the company will have an impact on the company's high value.…”

“…Dividends also provide shareholders with certainty and reduce the agency costs of equity. Management's actions on the company's cash flow decrease monitoring costs because shareholders believe management's policies will benefit them, increasing value (Kusumawati & Harijono, 2021). Investors often consider dividend policy as a sign of giving value to the company because it can affect the firm's value.…”

“…In addition, dividend policy shows that investors prefer companies that distribute dividends because of the apparent certainty of their investment returns (Kusumawati, & Harijono, 2021;Rahmawati et al, 2021). This means that the greater the dividend distributed by the company to shareholders, the company's performance is considered excellent and profitable.…”

Nilai Perusahaan Dan Pengaruh Moderasi Kebijakan Dividen: Pengungkapan Dari Emisi Karbon, Manajemen Risiko Dan Tata Kelola

“…Hasil pengujian ini tidak sesuai berdasarkan penelitian dari Hertina et al, 2020;Kusumawati et al, 2021;dimana Kebijakan dividen tidak memiliki kemampuan dalam memperkuat pengaruh dari informasi manajemen risiko yang diungkapkan perusahaan terhadap value-nya dikarenakan informasi manajemen risiko merupakan informasi yang meresahkan dan dinilai buruk oleh investor, sehingga meskipun perusahaan membagikan dividen, hal ini tidak dapat memberikan pengaruh atas peningkatan nilai perusahaan. Selain itu, kebijakan dividen memperlemah pengungkapan manajemen risiko terhadap nilai perusahaan dimungkinkan sebab kebijakan dividen bukan merupakan suatu kewajiban yang dibagikan secara terus -menerus.…”