Liquidity, leverage, and dividend policy: An empirical study of manufacturing companies in Indonesia

Abstract

Purpose- This study examines the relationship between liquidity, leverage, investment opportunities, company size, and dividend policy in manufacturing companies listed on the Indonesia Stock Exchange during the 2017–2019 period.

Design/methodology/approach- This research employs an associative research design, with panel data regression analysis conducted in EViews 10. The population comprises manufacturing companies listed on the Indonesia Stock Exchange, from which a purposive sample of 35 companies was selected.

Findings: The results reveal that liquidity does not significantly influence dividend policy. Similarly, investment opportunities and company size show no significant effect on dividend policy. However, leverage shows a negative, significant relationship with dividend policy, indicating that firms with higher debt levels tend to pay lower dividends.

Originality/value-This study contributes to the dividend policy literature by using recent data from the Indonesian capital market to capture contemporary market conditions. The findings are derived from audited financial statements, ensuring data reliability. The results offer practical insights for corporate financial managers in formulating dividend strategies and for investors in understanding dividend behavior in emerging markets.