The effect of financial performance, IOS, and firm size on cash holdings: the role of dividend policy as moderating variable

This study aims to determine and analyze the effect of financial performance (profitability, leverage, capital expenditure, liquid asset substitute), IOS, and company size on cash holding by using dividend policy as a moderating variable. The number of samples of this study was 108 observations of n...

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Main Authors: Woen Cliff Wibowo, Sugeng Wahyudi
Format: Article
Language:English
Published: Department of Management, Faculty of Economics and Business, Diponegoro University 2019-12-01
Series:DIJB (Diponegoro International Journal of Business)
Subjects:
Online Access:https://ejournal2.undip.ac.id/index.php/ijb/article/view/3165
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author Woen Cliff Wibowo
Sugeng Wahyudi
author_facet Woen Cliff Wibowo
Sugeng Wahyudi
author_sort Woen Cliff Wibowo
collection DOAJ
description This study aims to determine and analyze the effect of financial performance (profitability, leverage, capital expenditure, liquid asset substitute), IOS, and company size on cash holding by using dividend policy as a moderating variable. The number of samples of this study was 108 observations of non-financial companies in the LQ 45 Index for the period  of 2011-2016. The results of moderated regression analysis (MRA) shows that profitability has a positive effect on cash holding, while leverage, liquid asset substitute, IOS, and firm size have negative effect on cash holdings. The results of this study also show that dividend policy can be a moderating variable which weakens the positive effect of profitability on cash holding and strengthens the negative effect of capital expenditure, but the dividend policy is not able to moderate the influence of leverage on cash holding. As a result, the companies were able to make large dividend payouts to reduce the excessive amount of cash holding that managers often abused for their own benefits and increasingly prospering investors with a given dividend.
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spelling doaj.art-94883d51d67b4bab91c4aed758c7f1ed2022-12-22T03:41:01ZengDepartment of Management, Faculty of Economics and Business, Diponegoro UniversityDIJB (Diponegoro International Journal of Business)2580-49872580-49952019-12-01229610610.14710/dijb.2.2.2019.96-1063234The effect of financial performance, IOS, and firm size on cash holdings: the role of dividend policy as moderating variableWoen Cliff Wibowo0Sugeng Wahyudi1Universitas Diponegoro, IndonesiaUniversitas Diponegoro, IndonesiaThis study aims to determine and analyze the effect of financial performance (profitability, leverage, capital expenditure, liquid asset substitute), IOS, and company size on cash holding by using dividend policy as a moderating variable. The number of samples of this study was 108 observations of non-financial companies in the LQ 45 Index for the period  of 2011-2016. The results of moderated regression analysis (MRA) shows that profitability has a positive effect on cash holding, while leverage, liquid asset substitute, IOS, and firm size have negative effect on cash holdings. The results of this study also show that dividend policy can be a moderating variable which weakens the positive effect of profitability on cash holding and strengthens the negative effect of capital expenditure, but the dividend policy is not able to moderate the influence of leverage on cash holding. As a result, the companies were able to make large dividend payouts to reduce the excessive amount of cash holding that managers often abused for their own benefits and increasingly prospering investors with a given dividend.https://ejournal2.undip.ac.id/index.php/ijb/article/view/3165cash holdingprofitabilityleveragecapital expenditureliquid asset substituteiosfirm sizedividend policy
spellingShingle Woen Cliff Wibowo
Sugeng Wahyudi
The effect of financial performance, IOS, and firm size on cash holdings: the role of dividend policy as moderating variable
DIJB (Diponegoro International Journal of Business)
cash holding
profitability
leverage
capital expenditure
liquid asset substitute
ios
firm size
dividend policy
title The effect of financial performance, IOS, and firm size on cash holdings: the role of dividend policy as moderating variable
title_full The effect of financial performance, IOS, and firm size on cash holdings: the role of dividend policy as moderating variable
title_fullStr The effect of financial performance, IOS, and firm size on cash holdings: the role of dividend policy as moderating variable
title_full_unstemmed The effect of financial performance, IOS, and firm size on cash holdings: the role of dividend policy as moderating variable
title_short The effect of financial performance, IOS, and firm size on cash holdings: the role of dividend policy as moderating variable
title_sort effect of financial performance ios and firm size on cash holdings the role of dividend policy as moderating variable
topic cash holding
profitability
leverage
capital expenditure
liquid asset substitute
ios
firm size
dividend policy
url https://ejournal2.undip.ac.id/index.php/ijb/article/view/3165
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AT sugengwahyudi effectoffinancialperformanceiosandfirmsizeoncashholdingstheroleofdividendpolicyasmoderatingvariable