Cash Position, Free Cash Flow, Firm Size, and Leverage as Determinants of Dividend Payout: Does Profitability Mediate?
DOI:
https://doi.org/10.37385/dfnbq154Keywords:
Dividend Payout Ratio, Cash Position, Free Cash Flow, Profitability, Firm Size, Debt-To-Equity RatioAbstract
This study investigates whether cash position, free cash flow, firm size, and debt-to-equity ratio explain dividend payout and whether profitability transmits those relationships in Indonesian healthcare firms. The final balanced panel contains 17 companies listed on the Indonesia Stock Exchange over 2019-2024, yielding 102 firm-year observations after outlier trimming. Random-effects panel regressions estimate the direct paths, while Sobel tests assess the indirect paths through return on equity. Cash position and firm size are positively associated with dividend payout ratio, whereas free cash flow, leverage, and profitability have no signifi-cant direct association with payout. Free cash flow and firm size are positively associated with profitability, while leverage is negatively associated with profita-bility; cash position is not significant. None of the four indirect effects through profitability is significant. The evidence indicates that liquidity available at the payment date and organizational scale matter more for healthcare dividend deci-sions than accounting profitability alone. It also suggests that internally generated cash can strengthen profitability without necessarily being distributed, particularly where medical facilities, technology, and service expansion compete for funds. The study contributes a post-pandemic sector-specific test of dividend policy by separating cash availability from free cash flow and by examining profitability as a formally tested mediator.
References
Angela, A., & Budiman, J. (2022). The effects of ROI, current ratio, debt-to-equity ratio, earnings per share, and firm size on dividend payout ratio. Jurnal Ilmiah Manajemen Ekonomi & Akuntansi, 6(3), 2122–2135.
Aqmalia, A. N. H., & Anita, W. F. (2024). The influence of return on equity, debt-to-assets ratio, current ratio, and cash position on dividend payout ratio. Balance: Journal of Islamic Accounting, 5(2), 186–201.
Brav, A., Graham, J. R., Harvey, C. R., & Michaely, R. (2005). Payout policy in the 21st century. Journal of Financial Economics, 77(3), 483–527.
Chen, L., & Zhang, Y. (2021). The impact of free cash flow on dividend policy and firm value. Journal of Corporate Finance, 67, 101876.
Ghozali, I. (2018). Aplikasi analisis multivariate dengan program IBM SPSS 25 (8th ed.). Badan Penerbit Universitas Diponegoro.
Heliani, H., Yulianti, R., & Hermawan, I. (2022). Net profit margin, current ratio, debt-to-equity ratio, free cash flow, firm size, and dividend policy. [Nama jurnal perlu dilengkapi].
Indonesia Stock Exchange. (2024). Indonesia Stock Exchange annual report 2024. https://www.idx.co.id/
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.
Lee, J., & Park, S. (2021). Firm size and dividend policy: Evidence from emerging markets. Journal of Corporate Finance, 67, 101876.
Miller, M. H., & Modigliani, F. (1961). Dividend policy, growth, and the valuation of shares. The Journal of Business, 34(4), 411–433.
Mursidah, M., Yunina, Y., & Rahmi, F. (2023). Free cash flow, sales growth, liquidity, and financial performance. Jurnal Akuntansi Keuangan, 11(1), 89–100.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187–221.
Nguyen, T. H., Tran, Q. T., & Le, D. T. (2023). The impact of firm size on capital structure and dividend payout: Empirical evidence from Southeast Asia. Asian Journal of Business Accounting, 16(1), 45–67.
Novita, H., Gaol, R. L., Matanari, R., Siahaan, M., & Sarumaha, D. (2022). Liquidity, solvency, activity, and profitability in manufacturing firms. Owner, 6(2), 1655–1663.
Pangestu, J. C., & Akwila, K. (2024). Factors affecting dividend payout ratios in Indonesian banking firms. Jurnal Ekonomi Bisnis Manajemen dan Akuntansi, 4(2), 1096–1105.
Rochmah, H. N., & Ardianto, A. (2020). Catering dividend: Dividend premium and free cash flow on dividend policy. Cogent Business & Management, 7(1), 1812927.
Sholihin, M., & Ratmono, D. (2021). Analisis SEM-PLS dengan WarpPLS 7.0 untuk hubungan nonlinier dalam penelitian sosial dan bisnis. Andi.
Suryaman, Y., Nuridah, S., & Sagitarius, E. (2023). Leverage, activity ratios, and profitability in automotive manufacturing firms. Innovative: Journal of Social Science Research, 3(4), 7835–7844.
Teresia, T., & Santioso, L. (2025). Cash position, leverage, firm growth, and dividend policy. Jurnal Paradigma Akuntansi, 7(3), 1209–1219.
Veronisa, F. I., Budiantoro, H., Santosa, P. W., & Lapae, K. (2023). Asset structure, free cash flow, company growth, and debt policy with profitability as an intervening variable. Journal of Business and Economics Research, 4(2), 174–185.
