Does Dividend Policy Amplify or Diminish Company Value During Covid-19? A Moderated Analysis

Abstract

This study investigates the under-examined role of dividend policy as a moderator in the relationship between key financial factors and firm value during COVID-19. While prior research primarily focuses on the direct effects of profitability, liquidity, leverage, and investment decisions on firm value, this research explores how dividend policy can amplify or diminish these relationships. Utilizing a multiple linear regression model and processing using the STATA on a sample of companies from the cyclical and non-cyclical sectors listed on the IDX from 2020 to 2022. This research used purposive sampling to obtain 39 companies with 117 observations that passed the criteria. Our findings reveal that while profitability and leverage have a positive influence on firm value, the moderating effect of dividend policy is significant only for profitability during COVID-19. This suggests that dividend policy can strengthen the positive relationship between profitability and firm value. However, our results indicate that dividend policy does not significantly moderate the impact of liquidity, leverage, or investment decisions on firm value. This research is the first to analyze the role of dividend policy in the relationship between key financial factors and firm value during the COVID-19 crisis.