Analysis of the Effect of Profitability and Leverage on Dividend Policy Moderated by Company Size

Abstract

This research investigates how profitability and leverage impact dividend policy, considering company size as a moderating variable, in infrastructure companies listed on the Indonesia Stock Exchange (IDX) from 2018 to 2022. Dividend policy remains a complex financial issue for firms, with profitability generally enhancing the ability to pay dividends, while leverage can impose constraints. Recent perspectives suggest that company size could moderate these effects, offering a new angle for understanding dividend distributions in different organizational contexts. Utilizing a causal-conclusive research design, this study investigates the cause-and-effect relationships between the variables, analyzing data collected from RUPST (General Meeting of Shareholders) reports and annual financial statements. By focusing on the infrastructure sector, the study provides industry-specific insights into how dividend policies can be optimized based on profitability, leverage, and company size. The results of this research are anticipated to offer meaningful insights for financial managers, investors, and policy makers, enabling companies to customize their dividend strategies according to their specific financial and organizational characteristics. Additionally, this study enhances the existing literature by exploring the interaction between internal financial factors and company size in influencing dividend policy decisions, particularly in emerging markets such as Indonesia.