The Effect of Contributed Capital Mix on Dividend Policy: Testing Life Cycle Theory in The Covid-19 Pandemic Era

Abstract

Objective: This study aims to test whether life cycle theory is relevant in the era of the Covid-19 pandemic crisis. Specifically, whether the contributed capital mix has a significant effect on dividend policy. Theoretical framework: In this study, we tested the life cycle theory and whether it is relevant to the COVID-19 pandemic situation. The dividend policy of a corporation should be determined by where it is in its life cycle. Mature, well-established businesses usually give dividends. Method: We studied 66 companies in the non-cyclical consumer sector listed on the Indonesia Stock Exchange during the pandemic period from 2020 to 2022. The dependent variables used in this study are in the category of dividend payers and non-dividend payers. As for the independent variables, we use the variables return on assets, sales growth, rete, MarCap, Papen, teta, and cash holding. We use the logistic regression method with the data panel. Results and conclusion: It is statistically found that life cycle theory is relevant to some contributed capital mixes such as rete, MarCap, Papen, and cash holding. Meanwhile, ROA, SGR, and teta have no significant effect on dividend policy paying dividends or not but still have a positive relationship direction. Implications of the research: The life cycle hypothesis is being tested in the context of the pandemic era in this investigation. A better knowledge of how company financial decisions are impacted by economic crises may result from the results, regardless of whether they confirm or refute the life cycle theory. In terms of strategic financial planning, the research may provide financial managers with useful advice. It will assist them in understanding how to modify capital structure and dividend policies in response to economic shocks such as the COVID-19 pandemic. Originality/value: Studying Life Cycle Theory in the context of a pandemic enhances the research's theoretical components. It exhibits the willingness to adapt well-established ideas to unusual and intricate circumstances, which may result in a more thorough comprehension of the dynamics underlying corporate financial decisions.