Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data

Akhmadi Akhmadi

doi:doi:10.11648/j.jfa.20231101.14

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Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data

Akhmadi Akhmadi

Published in Journal of Finance and Accounting (Volume 11, Issue 1)

Received: 4 August 2021 Accepted: 1 March 2023 Published: 16 March 2023

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Abstract

This study aims to determine effect of capital structure and profitability on dividend policy by including firm size as a moderating variable. The samples in this study were 26 companies from 65 Basic Industrial and Chemical Manufacturing Sector Companies listed on the Indonesia Stock Exchange in 2011-2019, which were determined by purposive technique. The results showed that firm size is a variable that determines the strengthening and weakening of the relationship of capital structure with dividend policy also between profitability with dividend policy. Increasing firm size or increasing company assets do not provide incentives to increase the level of company profitability as measured by return on equity. Likewise, an increase in company assets does not provide incentives to increase dividend ratios, as an estimate of an increase in company income due to increased production capacity and company sales capacity. The larger firm size provides an incentive to increase the debt ratio because of the increasing need for funding to increase its investment in long-term assets. An increase in company size is also an indication for an increase in dividend ratios due to the estimated increase in company profits due to increased company revenue. Therefore, the determinants of capital structure and dividend policy in emerging markets such as the Indonesian market share the same set of suggested factors with the developed markets.

Published in	Journal of Finance and Accounting (Volume 11, Issue 1)
DOI	10.11648/j.jfa.20231101.14
Page(s)	32-37
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Firm Size, Capital Structure, Profitability, Dividend Policy

References

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APA Style

Akhmadi Akhmadi. (2023). Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data. Journal of Finance and Accounting, 11(1), 32-37. https://doi.org/10.11648/j.jfa.20231101.14

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ACS Style

Akhmadi Akhmadi. Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data. J. Finance Account. 2023, 11(1), 32-37. doi: 10.11648/j.jfa.20231101.14

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AMA Style

Akhmadi Akhmadi. Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data. J Finance Account. 2023;11(1):32-37. doi: 10.11648/j.jfa.20231101.14

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@article{10.11648/j.jfa.20231101.14,
  author = {Akhmadi Akhmadi},
  title = {Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data},
  journal = {Journal of Finance and Accounting},
  volume = {11},
  number = {1},
  pages = {32-37},
  doi = {10.11648/j.jfa.20231101.14},
  url = {https://doi.org/10.11648/j.jfa.20231101.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20231101.14},
  abstract = {This study aims to determine effect of capital structure and profitability on dividend policy by including firm size as a moderating variable. The samples in this study were 26 companies from 65 Basic Industrial and Chemical Manufacturing Sector Companies listed on the Indonesia Stock Exchange in 2011-2019, which were determined by purposive technique. The results showed that firm size is a variable that determines the strengthening and weakening of the relationship of capital structure with dividend policy also between profitability with dividend policy. Increasing firm size or increasing company assets do not provide incentives to increase the level of company profitability as measured by return on equity. Likewise, an increase in company assets does not provide incentives to increase dividend ratios, as an estimate of an increase in company income due to increased production capacity and company sales capacity. The larger firm size provides an incentive to increase the debt ratio because of the increasing need for funding to increase its investment in long-term assets. An increase in company size is also an indication for an increase in dividend ratios due to the estimated increase in company profits due to increased company revenue. Therefore, the determinants of capital structure and dividend policy in emerging markets such as the Indonesian market share the same set of suggested factors with the developed markets.},
 year = {2023}
}

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TY  - JOUR
T1  - Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data
AU  - Akhmadi Akhmadi
Y1  - 2023/03/16
PY  - 2023
N1  - https://doi.org/10.11648/j.jfa.20231101.14
DO  - 10.11648/j.jfa.20231101.14
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 32
EP  - 37
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20231101.14
AB  - This study aims to determine effect of capital structure and profitability on dividend policy by including firm size as a moderating variable. The samples in this study were 26 companies from 65 Basic Industrial and Chemical Manufacturing Sector Companies listed on the Indonesia Stock Exchange in 2011-2019, which were determined by purposive technique. The results showed that firm size is a variable that determines the strengthening and weakening of the relationship of capital structure with dividend policy also between profitability with dividend policy. Increasing firm size or increasing company assets do not provide incentives to increase the level of company profitability as measured by return on equity. Likewise, an increase in company assets does not provide incentives to increase dividend ratios, as an estimate of an increase in company income due to increased production capacity and company sales capacity. The larger firm size provides an incentive to increase the debt ratio because of the increasing need for funding to increase its investment in long-term assets. An increase in company size is also an indication for an increase in dividend ratios due to the estimated increase in company profits due to increased company revenue. Therefore, the determinants of capital structure and dividend policy in emerging markets such as the Indonesian market share the same set of suggested factors with the developed markets.
VL  - 11
IS  - 1
ER  -

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Author Information

Akhmadi Akhmadi

Faculty of Economics and Business, University of Sultan Ageng Tirtayasa, Serang, Indonesia

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APA Style

Akhmadi Akhmadi. (2023). Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data. Journal of Finance and Accounting, 11(1), 32-37. https://doi.org/10.11648/j.jfa.20231101.14

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ACS Style

Akhmadi Akhmadi. Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data. J. Finance Account. 2023, 11(1), 32-37. doi: 10.11648/j.jfa.20231101.14

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AMA Style

Akhmadi Akhmadi. Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data. J Finance Account. 2023;11(1):32-37. doi: 10.11648/j.jfa.20231101.14

Copy | Download

@article{10.11648/j.jfa.20231101.14,
  author = {Akhmadi Akhmadi},
  title = {Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data},
  journal = {Journal of Finance and Accounting},
  volume = {11},
  number = {1},
  pages = {32-37},
  doi = {10.11648/j.jfa.20231101.14},
  url = {https://doi.org/10.11648/j.jfa.20231101.14},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20231101.14},
  abstract = {This study aims to determine effect of capital structure and profitability on dividend policy by including firm size as a moderating variable. The samples in this study were 26 companies from 65 Basic Industrial and Chemical Manufacturing Sector Companies listed on the Indonesia Stock Exchange in 2011-2019, which were determined by purposive technique. The results showed that firm size is a variable that determines the strengthening and weakening of the relationship of capital structure with dividend policy also between profitability with dividend policy. Increasing firm size or increasing company assets do not provide incentives to increase the level of company profitability as measured by return on equity. Likewise, an increase in company assets does not provide incentives to increase dividend ratios, as an estimate of an increase in company income due to increased production capacity and company sales capacity. The larger firm size provides an incentive to increase the debt ratio because of the increasing need for funding to increase its investment in long-term assets. An increase in company size is also an indication for an increase in dividend ratios due to the estimated increase in company profits due to increased company revenue. Therefore, the determinants of capital structure and dividend policy in emerging markets such as the Indonesian market share the same set of suggested factors with the developed markets.},
 year = {2023}
}

Copy | Download

TY  - JOUR
T1  - Firm Size Moderate Relationship Between Capital Structure and Profitability with Dividend Policy: An Empirical Evidence from Indonesian Data
AU  - Akhmadi Akhmadi
Y1  - 2023/03/16
PY  - 2023
N1  - https://doi.org/10.11648/j.jfa.20231101.14
DO  - 10.11648/j.jfa.20231101.14
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 32
EP  - 37
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20231101.14
AB  - This study aims to determine effect of capital structure and profitability on dividend policy by including firm size as a moderating variable. The samples in this study were 26 companies from 65 Basic Industrial and Chemical Manufacturing Sector Companies listed on the Indonesia Stock Exchange in 2011-2019, which were determined by purposive technique. The results showed that firm size is a variable that determines the strengthening and weakening of the relationship of capital structure with dividend policy also between profitability with dividend policy. Increasing firm size or increasing company assets do not provide incentives to increase the level of company profitability as measured by return on equity. Likewise, an increase in company assets does not provide incentives to increase dividend ratios, as an estimate of an increase in company income due to increased production capacity and company sales capacity. The larger firm size provides an incentive to increase the debt ratio because of the increasing need for funding to increase its investment in long-term assets. An increase in company size is also an indication for an increase in dividend ratios due to the estimated increase in company profits due to increased company revenue. Therefore, the determinants of capital structure and dividend policy in emerging markets such as the Indonesian market share the same set of suggested factors with the developed markets.
VL  - 11
IS  - 1
ER  -

Copy | Download