Increasing liquidity and controlling leverage

Oct 13, 2025 by magicalceylontours.com 126 views

The Effect of Financial Performance and Sales Growth on Dividend Policy with Company Size as Moderating Variables in Automotive Sub Sector Manufacturing Companies Listed on the Indonesia Stock Exchange in 2016-2019

Introduction

The automotive industry is a vital sector in the Indonesian economy, with increasing demand for motor vehicles driving the growth of manufacturing companies in this subsector. As a form of profit returns to shareholders, dividend policy is a crucial aspect of a company's strategy. This study aims to investigate the effect of financial performance and sales growth on dividend policies in automotive sub-sector manufacturing companies listed on the Indonesia Stock Exchange (IDX) in 2016-2019. Additionally, this research analyzes the role of company size as a moderating variable in determining dividend policies.

Background

The automotive industry is a significant contributor to the Indonesian economy, with a growing demand for motor vehicles driving the expansion of manufacturing companies in this subsector. As a result, dividend policy has become a critical aspect of a company's strategy, as it directly affects the returns to shareholders. The dividend policy of a company is influenced by various factors, including financial performance, sales growth, and company size. Understanding the effect of these factors on dividend policy is essential for companies to formulate optimal dividend strategies and increase value for shareholders.

Research Methods

This study uses secondary data obtained from the Indonesia Stock Exchange. The sample used was 13 automotive sub-sector manufacturing companies listed on the IDX during the 2016-2019 period. The sampling technique used is purposive sampling, where the sample is selected based on specific criteria. Data analysis is carried out using EViews software, a statistical software package used for econometric analysis.

Results and Discussion

The results of this study show that liquidity (CR) and leverage (DER) have a significant influence on dividend policies. This indicates that companies with good liquidity and controlled leverage tend to provide greater dividends to shareholders. On the other hand, profitability (ROA), activity (tattoos), growth, and sales growth do not have a significant influence on dividend policy. This suggests that these factors are not a top priority in determining the dividend policy of the automotive manufacturing company.

Company Size as a Moderating Variable

The results of this study also show that company size acts as a moderating variable that is able to strengthen the effect of profitability, leverage, and activities on dividend policies. However, the size of the company is unable to moderate the effect of liquidity, growth, and sales growth on dividend policy. This implies that company size plays a crucial role in determining the dividend policy of a company, particularly in relation to profitability, leverage, and activities.

Implications

The results of this study provide some important implications for automotive subsector manufacturing companies:

Increasing liquidity and controlling leverage: Companies should increase liquidity and control leverage to improve the ability to provide dividends to shareholders.
Paying attention to the role of company size: Company size is an important factor that needs to be considered in determining dividend policies. Companies with a larger size tend to be more burdened by various external factors, so it is necessary to pay attention to its effect on dividend policy.
Diversification of profit returning strategies: In addition to dividend policies, companies can consider other strategies to return profits to shareholders, such as shares repurchase or reinvestment.

Conclusion

Financial performance and sales growth have a complex influence on dividend policies on automotive subsector manufacturing companies. The size of the company acts as a moderating variable that can strengthen the effect of several factors of financial performance on dividend policies. Therefore, companies should consider these factors in formulating optimal dividend strategies and increasing value for shareholders.

Recommendations

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

Automotive subsector manufacturing companies should prioritize increasing liquidity and controlling leverage to improve the ability to provide dividends to shareholders.
Companies should pay attention to the role of company size in determining dividend policies, particularly in relation to profitability, leverage, and activities.
Companies can consider diversifying their profit returning strategies, such as shares repurchase or reinvestment, in addition to dividend policies.

Limitations

This study has several limitations that should be noted. Firstly, the sample used is limited to 13 automotive sub-sector manufacturing companies listed on the IDX during the 2016-2019 period. Secondly, the study only analyzes the effect of financial performance and sales growth on dividend policies, without considering other factors that may influence dividend policy. Finally, the study only examines the role of company size as a moderating variable, without considering other moderating variables that may affect dividend policy.

Future Research Directions

Future research can build on the findings of this study by:

Examining the effect of other factors on dividend policy, such as market conditions, industry trends, and regulatory requirements.
Analyzing the role of other moderating variables, such as industry type, company age, and ownership structure, on dividend policy.
Investigating the impact of dividend policy on company performance, such as stock price, earnings per share, and return on equity.

By addressing these limitations and expanding the scope of the study, future research can provide a more comprehensive understanding of the factors that influence dividend policy and the role of company size as a moderating variable.
Frequently Asked Questions (FAQs) on the Effect of Financial Performance and Sales Growth on Dividend Policy with Company Size as Moderating Variables in Automotive Sub Sector Manufacturing Companies Listed on the Indonesia Stock Exchange in 2016-2019

Q: What is the main objective of this study?

A: The main objective of this study is to investigate the effect of financial performance and sales growth on dividend policies in automotive sub-sector manufacturing companies listed on the Indonesia Stock Exchange (IDX) in 2016-2019, with company size as a moderating variable.

Q: What are the key findings of this study?

A: The key findings of this study are:

Liquidity (CR) and leverage (DER) have a significant influence on dividend policies.
Profitability (ROA), activity (tattoos), growth, and sales growth do not have a significant influence on dividend policy.
Company size acts as a moderating variable that is able to strengthen the effect of profitability, leverage, and activities on dividend policies.

Q: What are the implications of this study for automotive subsector manufacturing companies?

A: The implications of this study for automotive subsector manufacturing companies are:

Increasing liquidity and controlling leverage can improve the ability to provide dividends to shareholders.
Paying attention to the role of company size in determining dividend policies is essential.
Diversifying profit returning strategies, such as shares repurchase or reinvestment, can be considered in addition to dividend policies.

Q: What are the limitations of this study?

A: The limitations of this study are:

The sample used is limited to 13 automotive sub-sector manufacturing companies listed on the IDX during the 2016-2019 period.
The study only analyzes the effect of financial performance and sales growth on dividend policies, without considering other factors that may influence dividend policy.
The study only examines the role of company size as a moderating variable, without considering other moderating variables that may affect dividend policy.

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

A: The future research directions based on this study are:

Examining the effect of other factors on dividend policy, such as market conditions, industry trends, and regulatory requirements.
Analyzing the role of other moderating variables, such as industry type, company age, and ownership structure, on dividend policy.
Investigating the impact of dividend policy on company performance, such as stock price, earnings per share, and return on equity.

Q: What are the practical implications of this study for investors and stakeholders?

A: The practical implications of this study for investors and stakeholders are:

Investors should consider the liquidity and leverage of a company when evaluating its dividend policy.
Stakeholders should pay attention to the role of company size in determining dividend policies.
Investors and stakeholders should consider diversifying their investment strategies to include other profit returning strategies, such as shares repurchase or reinvestment.

Q: What are the theoretical implications of this study for the field of finance?

A: The theoretical implications of this study for the field of finance are:

The study contributes to the existing literature on dividend policy by examining the effect of financial performance and sales growth on dividend policies.
The study provides evidence on the role of company size as a moderating variable in determining dividend policies.
The study highlights the importance of considering the liquidity and leverage of a company when evaluating its dividend policy.

Q: What are the policy implications of this study for regulatory bodies and policymakers?

A: The policy implications of this study for regulatory bodies and policymakers are:

Regulatory bodies should consider the liquidity and leverage of a company when evaluating its dividend policy.
Policymakers should pay attention to the role of company size in determining dividend policies.
Regulatory bodies and policymakers should consider diversifying their regulatory and policy strategies to include other profit returning strategies, such as shares repurchase or reinvestment.