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

*Woen Cliff Wibowo  -  Universitas Diponegoro, Indonesia
Sugeng Wahyudi scopus  -  Universitas Diponegoro, Indonesia
Received: 4 Sep 2018; Published: 31 Dec 2019.
Open Access Copyright 2019 Diponegoro International Journal of Business
License URL: http://creativecommons.org/licenses/by-sa/4.0

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Section: Articles
Language: EN
Statistics: 340 169
Abstract
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.
Keywords: cash holding; profitability; leverage; capital expenditure; liquid asset substitute; IOS; firm size; dividend policy

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