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Managerial Ownership, Leverage, Dividend Policy, Free Cash Flow, Firm Value: Evidence in Indonesia Stock Exchange

Author

Listed:
  • Alni Rahmawati

    (Doctoral Management Program, Postgraduate, Universitas Muhammadiyah Yogyakarta, Indonesia)

  • Askar Garad

    (Master Management Program, Universitas Muhammadiyah Yogyakarta. Indonesia)

Abstract

Limited liability company agency issues in Indonesia make for an exciting study topic from both the corporate law and corporate finance perspectives, giving rise to an agency issue, or conflict of interest. Determining the impact of managerial ownership, leverage, and dividend policy on free cash flow and firm value in the Manufacturing Industry listed on the Indonesia Stock Exchange from 2014 to 2020 is the goal of the study. 33 sample companies and 198 data samples total are used in this purposive sampling study. The data is balanced panel data that was analyzed using a stepwise regression approach. The results showed that managerial ownership had a significant negative effect on firm value, leverage did not affect firm value, dividend policy had a significant positive effect on firm value, and free cash flow had a significant positive effect on firm value. managerial ownership does not affect free cash flow, leverage has a significant positive effect on free cash flow, and dividend policy has a significant negative effect on free cash flow. This study implies that managers tend to be opportunistic so institutional ownership interference in the manufacturing industry in Indonesia is still high. High dividend payments will give a positive signal that will have an impact on increasing stock prices.

Suggested Citation

Handle: RePEc:bco:mbrqaa::v:25:y:2023:p:32-44
DOI: 10.32038/mbrq.2023.25.03
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