Industry and country specificity

Oct 13, 2025 by talynt.org 134 views

The Effect of Investment Decisions, Funding Decisions, and Dividend Policies on the Value of Manufacturing Companies Listed on the Indonesia Stock Exchange

Introduction

In today's highly competitive business landscape, making informed and strategic decisions is crucial for the success of any company. This is particularly true for manufacturing companies listed on the Indonesia Stock Exchange, where the right decisions can significantly impact their value. This study aims to investigate the effect of investment decisions, funding decisions, and dividend policies on the value of manufacturing companies listed on the Indonesia Stock Exchange. By examining these three critical aspects, we hope to provide insights into how these decisions influence company value and identify areas for improvement.

Background

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a market capitalization of over $1 trillion. The IDX is home to over 600 listed companies, including many prominent manufacturing companies. These companies play a vital role in the country's economy, providing employment opportunities, generating revenue, and contributing to the country's GDP. However, in today's fast-paced and competitive business environment, manufacturing companies must continually adapt and innovate to remain competitive and attractive to investors.

Research Methodology

This study employed a quantitative research approach, using descriptive statistical analysis, classical assumption tests, and hypothesis tests to analyze the data. The independent variables studied were investment decisions, funding decisions, and dividend policies, while the dependent variable was the company's value. The samples taken consisted of 133 companies, with a purposive sampling technique used to select 26 companies that were observed over the past four years. The data used was secondary data, providing an accurate picture of the condition of these companies.

Results

The results of this study showed that simultaneously, investment decisions, funding decisions, and dividend policies did not have a significant effect on company value. However, when viewed partially, only investment decision variables showed positive effects on company value. Meanwhile, funding decisions and dividend policies did not have a significant effect on company value.

Deeper Analysis

The discovery that investment decisions have an influence on company value can be interpreted that companies that make strategic investments, such as product development or market expansion, tend to increase the value of their assets and reputation in the eyes of investors. This shows the importance of companies to conduct in-depth analysis before making investment decisions to ensure that the funds spent will provide optimal returns.

On the other hand, funding decisions that do not affect the company's value may indicate that the way the company finances operations and their projects is not strong enough to influence investor perceptions. Companies that owe or rely on their own capital must consider how this funding structure will be viewed by the market. It is possible that investors are more focused on operational performance and growth potential than how the company is financed.

Dividend policy, on the other hand, functions as a signal to investors regarding company financial health. However, in this study, dividend policy did not show a significant impact on company value. This could be caused by several factors, such as investor preferences that are more interested in capital gain than dividends or unstable market conditions that make investors prefer liquidity.

Conclusion

From this study, it can be concluded that manufacturing companies listed on the Indonesia Stock Exchange must focus more on intelligent and strategic investment decisions to increase the value of their company. Funding decisions and dividend policies, although important, do not always have a significant impact in increasing the value of investors. This shows the need for companies to remain adaptive and responsive to market conditions to remain competitive and attractive to investors.

Recommendations

Based on the findings of this study, the following recommendations are made:

Investment decisions: Manufacturing companies listed on the Indonesia Stock Exchange should focus on making strategic investment decisions that increase the value of their assets and reputation in the eyes of investors.
Funding decisions: Companies should consider how their funding structure will be viewed by the market and ensure that it is strong enough to influence investor perceptions.
Dividend policy: Companies should consider the preferences of their investors and adjust their dividend policy accordingly.
Market conditions: Companies should remain adaptive and responsive to market conditions to remain competitive and attractive to investors.

Limitations

This study has several limitations that should be noted. Firstly, the study only focused on manufacturing companies listed on the Indonesia Stock Exchange, and the findings may not be generalizable to other industries or countries. Secondly, the study used secondary data, which may not be comprehensive or up-to-date. Finally, the study only examined the effect of investment decisions, funding decisions, and dividend policies on company value, and did not consider other factors that may influence company value.

Future Research Directions

This study provides several avenues for future research. Firstly, researchers could investigate the effect of other factors, such as corporate governance, risk management, and innovation, on company value. Secondly, researchers could examine the effect of investment decisions, funding decisions, and dividend policies on company value in other industries or countries. Finally, researchers could investigate the impact of market conditions on company value and develop strategies for companies to remain competitive and attractive to investors.

Conclusion

In conclusion, this study provides insights into the effect of investment decisions, funding decisions, and dividend policies on the value of manufacturing companies listed on the Indonesia Stock Exchange. The findings suggest that manufacturing companies should focus on making strategic investment decisions to increase the value of their company. Funding decisions and dividend policies, although important, do not always have a significant impact in increasing the value of investors. This study provides recommendations for companies to remain adaptive and responsive to market conditions to remain competitive and attractive to investors.
Frequently Asked Questions (FAQs) on the Effect of Investment Decisions, Funding Decisions, and Dividend Policies on the Value of Manufacturing Companies Listed on the Indonesia Stock Exchange

Q: What is the main focus of this study? A: The main focus of this study is to investigate the effect of investment decisions, funding decisions, and dividend policies on the value of manufacturing companies listed on the Indonesia Stock Exchange.

Q: What are the independent variables studied in this research? A: The independent variables studied in this research are investment decisions, funding decisions, and dividend policies.

Q: What is the dependent variable in this study? A: The dependent variable in this study is the company's value.

Q: What is the sample size of this study? A: The sample size of this study is 133 companies, with a purposive sampling technique used to select 26 companies that were observed over the past four years.

Q: What type of data is used in this study? A: The data used in this study is secondary data.

Q: What are the findings of this study? A: The findings of this study show that simultaneously, investment decisions, funding decisions, and dividend policies do not have a significant effect on company value. However, when viewed partially, only investment decision variables show positive effects on company value.

Q: What does the discovery that investment decisions have an influence on company value mean? A: The discovery that investment decisions have an influence on company value means that companies that make strategic investments, such as product development or market expansion, tend to increase the value of their assets and reputation in the eyes of investors.

Q: What does the finding that funding decisions do not affect the company's value mean? A: The finding that funding decisions do not affect the company's value means that the way the company finances operations and their projects is not strong enough to influence investor perceptions.

Q: What does the finding that dividend policy does not show a significant impact on company value mean? A: The finding that dividend policy does not show a significant impact on company value means that investor preferences may be more interested in capital gain than dividends or unstable market conditions may make investors prefer liquidity.

Q: What are the recommendations of this study? A: The recommendations of this study are:

Investment decisions: Manufacturing companies listed on the Indonesia Stock Exchange should focus on making strategic investment decisions that increase the value of their assets and reputation in the eyes of investors.
Funding decisions: Companies should consider how their funding structure will be viewed by the market and ensure that it is strong enough to influence investor perceptions.
Dividend policy: Companies should consider the preferences of their investors and adjust their dividend policy accordingly.
Market conditions: Companies should remain adaptive and responsive to market conditions to remain competitive and attractive to investors.

Q: What are the limitations of this study? A: The limitations of this study are:

Industry and country specificity: The study only focused on manufacturing companies listed on the Indonesia Stock Exchange, and the findings may not be generalizable to other industries or countries.
Data comprehensiveness: The study used secondary data, which may not be comprehensive or up-to-date.
Other factors: The study only examined the effect of investment decisions, funding decisions, and dividend policies on company value, and did not consider other factors that may influence company value.

Q: What are the future research directions of this study? A: The future research directions of this study are:

Investigating the effect of other factors: Researchers could investigate the effect of other factors, such as corporate governance, risk management, and innovation, on company value.
Examining the effect of investment decisions, funding decisions, and dividend policies in other industries or countries: Researchers could examine the effect of investment decisions, funding decisions, and dividend policies on company value in other industries or countries.
Investigating the impact of market conditions on company value: Researchers could investigate the impact of market conditions on company value and develop strategies for companies to remain competitive and attractive to investors.