The Role of Dividend Policy in Mediating the Effect of Ownership Structure and Financing Decisions on Firm Value: Evidence from Lq45 Companies in Indonesia

Abstract

This study aims to analyze the role of dividend policy in mediating the effect of ownership structure and financing decisions on firm value. The research employed a quantitative approach using panel data analysis on 15 companies listed in the LQ45 index of the Indonesia Stock Exchange (IDX) during the period 2014-2024. Ownership structure was measured through institutional ownership, managerial ownership, and public ownership. Financing decisions were proxied by various debt ratios including short-term debt to equity, long-term debt to equity, debt-to-equity ratio (DER), and debt-to-asset ratio (DAR). Dividend policy was measured using dividend payout ratio (DPR), dividend yield (DY), and dividend per share (DPS). Firm value was proxied by Tobin's Q, price-to-book value of equity (PBVE), market-to-book value of assets (MVBA), and market capitalization. The results of this study found that Ownership Structure has a negative and insignificant effect on Firm Value. Ownership Structure has a negative and insignificant effect on Dividend Policy. Financing Decisions have a positive and significant effect on Firm Value. Funding Decisions have a positive and significant effect on Dividend Policy. Dividend Policy has a positive and significant effect on Firm Value. The results of the mediation test indicate that Dividend Policy is unable to significantly mediate the effect of Ownership Structure on Firm Value. Financing Decisions have a positive and significant effect on Firm Value through Dividend Policy.