Firm value determinants: Reconsidering dividend policy’s moderating role in Indonesia’s top-tier stock index
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Received January 27, 2025;Accepted July 14, 2025;Published August 6, 2025
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Author(s)Link to ORCID Index: https://orcid.org/0009-0004-1937-7876
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Link to ORCID Index: https://orcid.org/0009-0004-1051-0239,
Link to ORCID Index: https://orcid.org/0009-0002-5572-2142,
Link to ORCID Index: https://orcid.org/0009-0002-1808-6087 -
DOIhttp://dx.doi.org/10.21511/imfi.22(3).2025.11
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Article InfoVolume 22 2025, Issue #3, pp. 140-151
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Type of the article: Research Article
Abstract
Investors are very interested in companies that have high profits and stable dividend payments. Increasing investment and company profitability increase firm value. This study aims to examine the relationship between liquidity, company size, and earnings quality with firm value and dividend policy as moderators in this relationship. The secondary data used come from the 45 most liquid shares (LQ45) on the Indonesia Stock Exchange and have observations for 10 years from 2014 to 2023. The sample used is 450 data points and is tested using moderated regression analysis. The findings show that earnings quality and liquidity have significant effects on firm value. Conversely, there is no notable effect of firm size on firm value; large assets do not necessarily mean greater firm value if the assets are inefficient. Interactive effect analysis reveals that dividend policy moderates the association between liquidity and firm value, affirming its crucial role in facilitating firm valuation. Also, dividend policy affects the influence of earnings quality on firm value. However, dividend policy does not moderate the relationship between firm size and firm value. Such findings are especially valuable for investors as they indicate that liquid stocks tend to maintain stable dividend payouts, further affirming their value. Moreover, the study suggests that large assets necessarily lead to a greater valuation of a company unless paired with effective management strategies in a volatile business environment.
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JEL Classification (Paper profile tab)G32, L21, M41
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References43
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Tables8
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Figures1
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- Figure 1. Research framework
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- Table 1. Variable proxy and measurement
- Table 2. Normality test
- Table 3. Multicollinearity test
- Table 4. Heteroscedasticity test
- Table 5. Autocorrelation test
- Table 6. Coefficient of determination
- Table 7. F-statistical test
- Table 8. T-statistical test
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Conceptualization
A. Razak, Urai Muhaini, Reni Dwi Widyastuti, Ismail Umar
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Data curation
A. Razak, Urai Muhaini, Reni Dwi Widyastuti, Ismail Umar
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Formal Analysis
A. Razak, Urai Muhaini
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Investigation
A. Razak, Urai Muhaini, Reni Dwi Widyastuti, Ismail Umar
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Methodology
A. Razak, Urai Muhaini, Reni Dwi Widyastuti, Ismail Umar
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Project administration
A. Razak
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Supervision
A. Razak, Urai Muhaini, Reni Dwi Widyastuti, Ismail Umar
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Validation
A. Razak, Ismail Umar
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Writing – original draft
A. Razak
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Visualization
Urai Muhaini, Ismail Umar
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Writing – review & editing
Urai Muhaini, Reni Dwi Widyastuti, Ismail Umar
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Conceptualization
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The moderating role of firm size and interest rate in capital structure of the firms: selected sample from sugar sector of Pakistan
Sarfraz Hussain, Abdul Quddus
, Pham Phat Tien
, Muhammad Rafiq
, Drahomíra Pavelková
doi: http://dx.doi.org/10.21511/imfi.17(4).2020.29
Investment Management and Financial Innovations Volume 17, 2020 Issue #4 pp. 341-355 Views: 4428 Downloads: 574 TO CITE АНОТАЦІЯThe selection of financing is a top priority for businesses, particularly in short- and long-term investment decisions. Mixing debt and equity leads to decisions on the financial structure for businesses. This research analyzes the moderate position of company size and the interest rate in the capital structure over six years (2013–2018) for 29 listed Pakistani enterprises operating in the sugar market. This research employed static panel analysis and dynamic panel analysis on linear and nonlinear regression methods. The capital structure included debt to capital ratio, non-current liabilities, plus current liabilities to capital as a dependent variable. Independent variables were profitability, firm size, tangibility, Non-Debt Tax Shield, liquidity, and macroeconomic variables were exchange rates and interest rates. The investigation reported that profitability, firm size, and Non-Debt Tax Shield were significant and negative, while tangibility and interest rates significantly and positively affected debt to capital ratio. This means the sugar sector has greater financial leverage to manage the funding obligations for the better performance of firms. Therefore, the outcomes revealed that the moderators have an important influence on capital structure.
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Inventory management, cost of capital and firm performance: evidence from manufacturing firms in Jordan
Ashraf Mohammad Salem Alrjoub, Muhannad Akram Ahmad doi: http://dx.doi.org/10.21511/imfi.14(3).2017.01
Investment Management and Financial Innovations Volume 14, 2017 Issue #3 pp. 4-14 Views: 3241 Downloads: 2190 TO CITE АНОТАЦІЯSeveral studies have examined the relationship between inventory management and firm performance. However, most of these studies ignore the impact of inventory types on the relationship. Moreover, the relationship is influenced by some factors such as cost of capital which has not been considered. This study examines the moderating effect of cost of capital on the relationship between inventory types and firm performance. The data of 48 firms for the period 2010-2016 which formed 279 firm-year observations were used in this study. With the use of Pearson correlation and panel Generalized Method of Moments (GMM) estimation, the findings show that inventory management with consideration of its types influence firm performance in the long term. In addition, it is also found that cost of capital moderates the relationship between inventory management and firm performance. However, the interaction between cost of capital and inventory types has different implications. It is suggested that firms should consider cost of capital when making decision on inventory types and align their inventory control to fit in to the changes in their business environment.
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Effect of corporate governance on the financial performance of commercial banks in Nigeria
Lawrence Uchenna Okoye, Felicia Olokoyo
, Johnson I. Okoh , Felix Ezeji , Rhoda Uzohue doi: http://dx.doi.org/10.21511/bbs.15(3).2020.06
Banks and Bank Systems Volume 15, 2020 Issue #3 pp. 55-69 Views: 3099 Downloads: 2127 TO CITE АНОТАЦІЯBanks are expected to operate within acceptable standards of governance for consistent profitable operations. They run heavily on customer deposits, which is confidence-driven. Since the quality of governance is critical to winning and retaining customer confidence and patronage, the imperative for good governance practices in banks cannot be overemphasized. This research paper explores the nexus between governance practices and bank profitability in Nigeria. It adopts the size of bank board and directors’ stake as proxies for corporate governance, with return on assets and return on equity as representations for financial performance. The research incorporates firm size as a controlled variable. The estimation technique of the Generalized Method of Moments was employed. Evidence from the research reveals that board size, directors’ equity, and firm size substantially affect Nigerian banks’ financial performance. Besides, the study shows a robust effect of lagged return on equity on the current level of performance. Therefore, the study asserts that governance in business entities strongly affects their financial performance and recommends maintaining optimum board size to minimize boardroom conflicts. It further prescribes that the requirement for substantial equity stake by directors of banking institutions be sustained, as it secures commitment to governance practices that support profitability.
Acknowledgment
The authors acknowledge the support of Covenant University towards the publication of this paper.