Dividend Policy and Interest Rates

Oct 13, 2025 by talynt.org 21 views

The Effect of Investment Decisions, Funding Decisions, Dividend Policy, Profitability, and Interest Rates on the Value of Manufacturing Companies on the Indonesia Stock Exchange (2013-2016)

Introduction

In the world of investments, the decisions made by a company can have a significant impact on its value. This study aims to analyze the effect of several factors, such as investment decisions, funding decisions, dividend policies, profitability, and interest rates on the value of manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2013 to 2016 period. Understanding the impact of these factors is crucial for company management to make informed decisions that can contribute to the company's value.

Research Background

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a total of 143 companies listed during the 2013 to 2016 period. This study focuses on 28 manufacturing companies out of the total listed companies, with the aim of analyzing the effect of various factors on their value. The data used in this study is secondary data taken from the Indonesia Stock Exchange website.

Research Variable

In this study, the company's value functions as a dependent variable, while investment decisions, funding decisions, dividend policies, profitability, and interest rates as independent variables. The analysis method used is multiple linear regression with a significance level of α of 5%. This method allows us to analyze the relationship between the independent variables and the dependent variable, while controlling for the effects of other variables.

Research Findings

The results of this study show that simultaneously, investment decisions, funding decisions, dividend policies, profitability, and interest rates have a significant influence on company value. However, when tested partially, the results provide a more detailed picture:

Investment Decision

Despite having a positive influence, its effect on company value is declared insignificant. This shows that the investment decision taken by the company is not always well received by the market or indirectly contributes to increasing company value. This finding suggests that companies must be more strategic in their investment decisions to contribute to the company's value significantly.

Funding Decisions

Funding decisions show negative effects and are also not significant on company value. This indicates that the way the company in financing its operations may not have the expected positive impact, perhaps because the debt burden is too high or the selection of funding sources that are less than optimal. This finding suggests that companies must be more careful in their funding decisions to avoid negative impacts on company value.

Dividend Policy and Interest Rates

Both of these variables show a positive positive effect on the company's value. The dividend policy implemented by the company may not be quite attractive to investors, while low interest rates may not be enough to encourage the expected growth. This finding suggests that companies must be more strategic in their dividend policies and interest rates to contribute to the company's value significantly.

Profitability

Unlike other variables, profitability shows positive and significant effects on company value. This shows that the higher the company's profitability, the higher the company's value in the eyes of investors. Good financial performance is an important indicator for investors in evaluating company value. This finding suggests that companies must focus on increasing operational efficiency and business strategies that can increase their profitability.

Analysis and Conclusion

With an Adjusted R Square value of 0.090086 or 9%, it can be concluded that only a small portion of the company value variations can be explained by these variables. Although investment decisions and dividend policies have a positive effect, its insignificant effect shows that companies must be more strategic in the application of these policies in order to contribute to the company's value significantly.

On the other hand, profitability remains a key factor that must be considered. Manufacturing companies in Indonesia need to focus on increasing operational efficiency and business strategies that can increase their profitability, in order to attract the attention of the market and increase the value of companies in the Indonesia Stock Exchange.

Overall, this research provides important insights for company management to consider various aspects of decision making that has the potential to affect the value of the company, especially in the changing market context.

Implications of the Study

This study has several implications for company management, investors, and policymakers. Firstly, it highlights the importance of profitability in determining company value. Companies must focus on increasing operational efficiency and business strategies that can increase their profitability. Secondly, it suggests that companies must be more strategic in their investment decisions, funding decisions, dividend policies, and interest rates to contribute to the company's value significantly. Finally, it emphasizes the need for policymakers to create a favorable business environment that can attract investments and promote economic growth.

Limitations of the Study

This study has several limitations. Firstly, it only focuses on 28 manufacturing companies out of the total listed companies on the Indonesia Stock Exchange. Secondly, it only analyzes the effect of five variables on company value. Finally, it only uses secondary data taken from the Indonesia Stock Exchange website.

Future Research Directions

This study provides several directions for future research. Firstly, it can be extended to include more variables that can affect company value. Secondly, it can be applied to other industries or countries to see if the findings are generalizable. Finally, it can be used to develop a more comprehensive model of company value that can be used by company management and policymakers.

Conclusion

In conclusion, this study provides important insights into the effect of investment decisions, funding decisions, dividend policies, profitability, and interest rates on the value of manufacturing companies listed on the Indonesia Stock Exchange during the 2013 to 2016 period. The findings suggest that companies must be more strategic in their decision making to contribute to the company's value significantly. The study also highlights the importance of profitability in determining company value and emphasizes the need for policymakers to create a favorable business environment that can attract investments and promote economic growth.
Frequently Asked Questions (FAQs) about the Effect of Investment Decisions, Funding Decisions, Dividend Policy, Profitability, and Interest Rates on the Value of Manufacturing Companies on the Indonesia Stock Exchange (2013-2016)

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the effect of investment decisions, funding decisions, dividend policies, profitability, and interest rates on the value of manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2013 to 2016 period.

Q: What is the significance of this study?

A: This study is significant because it provides insights into the factors that affect the value of manufacturing companies in Indonesia. The findings of this study can be used by company management, investors, and policymakers to make informed decisions that can contribute to the company's value.

Q: What are the research variables used in this study?

A: The research variables used in this study are:

Investment decisions
Funding decisions
Dividend policies
Profitability
Interest rates

Q: What is the analysis method used in this study?

A: The analysis method used in this study is multiple linear regression with a significance level of α of 5%.

Q: What are the findings of this study?

A: The findings of this study show that simultaneously, investment decisions, funding decisions, dividend policies, profitability, and interest rates have a significant influence on company value. However, when tested partially, the results provide a more detailed picture:

Investment decisions have a positive influence but are declared insignificant.
Funding decisions show negative effects and are also not significant on company value.
Dividend policy and interest rates show a positive positive effect on the company's value.
Profitability shows positive and significant effects on company value.

Q: What are the implications of this study?

A: The implications of this study are:

Companies must focus on increasing operational efficiency and business strategies that can increase their profitability.
Companies must be more strategic in their investment decisions, funding decisions, dividend policies, and interest rates to contribute to the company's value significantly.
Policymakers must create a favorable business environment that can attract investments and promote economic growth.

Q: What are the limitations of this study?

A: The limitations of this study are:

It only focuses on 28 manufacturing companies out of the total listed companies on the Indonesia Stock Exchange.
It only analyzes the effect of five variables on company value.
It only uses secondary data taken from the Indonesia Stock Exchange website.

Q: What are the future research directions?

A: The future research directions are:

Extending the study to include more variables that can affect company value.
Applying the study to other industries or countries to see if the findings are generalizable.
Developing a more comprehensive model of company value that can be used by company management and policymakers.

Q: What are the practical implications of this study?

A: The practical implications of this study are:

Company management can use the findings of this study to make informed decisions that can contribute to the company's value.
Investors can use the findings of this study to evaluate the value of manufacturing companies in Indonesia.
Policymakers can use the findings of this study to create a favorable business environment that can attract investments and promote economic growth.

Q: What are the theoretical implications of this study?

A: The theoretical implications of this study are:

It contributes to the existing literature on the factors that affect company value.
It provides insights into the relationship between investment decisions, funding decisions, dividend policies, profitability, and interest rates and company value.
It highlights the importance of profitability in determining company value.