The Effects of Company Growth, Institutional Ownership, and Liquidity on Company Value, with Dividend Policy as a Mediating Variable

Abstract

Research Objective: This study aims to analyze the effects of firm growth, institutional ownership, and liquidity on firm value, as well as to test the role of dividend policy as a mediating variable in manufacturing companies listed on the Indonesia Stock Exchange for the period 2021–2024. Design/Methodology/Approach: This study employs a quantitative approach using secondary data obtained from the financial statements of manufacturing companies listed on the Indonesia Stock Exchange for the period 2021–2024. The research sample was determined using purposive sampling based on specific criteria. The analysis method used was panel data regression with the aid of EViews software to test the relationships between variables, as well as the Sobel test to examine the role of dividend policy as a mediating variable. Research Findings: The results indicate that firm growth has a negative and significant effect on dividend policy, whereas institutional ownership and liquidity do not have a significant effect on dividend policy. Furthermore, firm growth, institutional ownership, liquidity, and dividend policy do not have a significant effect on firm value. The results of the mediation test indicate that dividend policy mediates the effect of firm growth on firm value but does not mediate the effects of institutional ownership and liquidity on firm value. Theoretical Contribution/Originality: This study contributes to enriching the literature on firm value by testing the role of dividend policy as a mediating variable simultaneously using panel data from manufacturing firms in Indonesia. The finding that most variables do not have a significant effect and that mediation occurs only for firm growth suggests that dividend policy is not always a strong mechanism for increasing firm value, particularly in emerging markets. Practitioner/Policy Implications: This study implies that dividend policy can serve as an important signal for management in communicating the company’s growth prospects to investors. For investors, dividend policy should be considered alongside financial indicators in investment decision-making. Meanwhile, for regulators, these results provide a basis for promoting transparency and consistency in dividend policy to enhance market confidence. Research Limitations/Implications: This study is limited to the manufacturing sector and the 2021– 2024 period, and it uses only the variables of firm growth, institutional ownership, and liquidity; therefore, the results cannot yet be broadly generalized. Consequently, future research is recommended to expand the sector, include additional variables, and employ more comprehensive analytical methods.