Impact of dividend policy on stock prices

Abstract

This study aims to test and analyze the research model by using dividend policy as an intervening variable on the effect of firm value and capital structure on firm value. Other variables influencing the stock price are investment opportunity set, trading volume activity, and profitability. The objects of this research are companies included in the LQ45 index on the Indonesia Stock Exchange during the period 2012 - 2021. The analytical tool we use is path analysis to test the effect of exogenous variables on endogenous variables, including testing direct and indirect effects. The results of testing 177 samples over a period of 10 years resulted in the finding that the dividend policy with the DPR (Dividend Payout Ratio) indicator was unable to mediate funding policy and firm value in increasing stock prices. Another study found that factors that increase SP (stock prices) in a positive and significant direction of influence are ROE (Return On Equity), and DPR (Dividend Payout Ratio), while other variables such as PER (Price Earning Ratio) and DER (Debt to Equity Ratio) do not significantly increase SP (Stock Prices) despite the positive direction of influence. While the factors that can reduce SP (Stock Prices) in our study are DAR (Debt to Assets Ratio) and TVA (Trading Volume Activity), and other factors that do not significantly reduce SP (Stock Prices) even though the direction of influence is negative are PBV (Price to Book Value) and ROA (Return on Assets).