Moderating Effect of Liquidity on Profitability and Investment Opportunity Set toward Dividend Policy

Abstract

Dividends are profits that are distributed to investors in accordance with the proportion. The dividend distribution policy of a company will affect investors' decisions to invest. The dividend policy taken by the company is inseparable from the profitability, investment opportunity set and also the liquidity of the company itself. This study aims to examine the effect of profitability and investment opportunity set on dividend policy with liquidity as a moderating variable. The population in this study was taken from all manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2019-2020 period. This research was conducted using a sample of 90 manufacturing companies listed on the Indonesia Stock Exchange using the 2019 – 2020 annual report. Data analysis used descriptive statistics, research instrument testing used validity tests, reliability tests, and classical assumption tests including normality tests, multicollinearity tests, and heteroscedasticity test. Multiple regression analysis, partial test (T test), and moderation test for hypothesis testing. The results of this study indicate that dividend policy is influenced by profitability and investment opportunity set and liquidity is able to moderate the relationship between these variables.