THE INFLUENCE OF FIRM FINANCIAL PERFORMANCE ON DIVIDEND POLICY AND ITS EFFECT TO THE FIRM VALUE (Study at Manufacturer Companies Listed in Indonesia Stock Exchange for the Period of 2010-2012)

Evaria Novita, Kusdi Rahardjo, Imam Suyadi


The objectives of this research are to analyze the influence of firm financial performance on dividend policy and its effect to the firm value of manufacturer companies listed in Indonesian Stock Exchange (IDX) for the periof of 2010-2012 and give recommendations as the completion upon this research. By applying  Generalized  Structured  Component  Analysis  (GSCA)  of  19  sample  used,  the  analysis attempts to examining the influence among variables. This research uses current ratio (CR), debt to equity ratio (DER), return on common equity (ROE), earning per share (EPS), and price to book value (PBV) as the variables of firm financial performance, dividend payout ratio (DPR) as the variable of dividend policy, and closing stock price as the variable of firm value. Result of the research reveal that CR has no significant influence on DPR, however CR has a positive and signifant influence on stock price. DER has no significant influence to the DPR and also to the stock price. ROE, EPS, and PBV has a positive and significant influence to the DPR and also to the stock price. Furthermore, DPR has a positive and significant influence on stock price. The present research confirms that firm financial performance, dividend policy, and firm value is the essential and important aspect for the investors in determining the profitable stocks. Therefore, it is very useful for investors to considerate these variable of research in order to make the right investment decisions and do stock trading confidently.


Financial Ratios; Dividend Payout; Stock Price; Manufacturer Companies; IDX; GSCA

Full Text:



Ali, Syed Atif and Amir Razi. 2012. “Impact of Companies Internal Variables on Stock Prices: A Case Study of Major Industries of Pakistan”, International Conference on Education, Applied Sciences, and Management: 141-145.

Appanan, Santhi and Lee Wei Shin. 2011. “A Study on Leading Determinants of Dividend Policy in Malaysia Listed Companies for Food Industry Under Consumer Product Sector”, International Conference on Business and Economic Research: 946-976.

Brigham, Eugene F and Michael C. Ehrhardt. 2005. Financial Management: Theory and Practice. Eleventh Edition.

Mason: Cengage Learning. Brigham, Eugene F. and Phillip R. Daves. 2007. Intermediate Financial Management. Ninth Edition. Mason: Thompson/South-Western.

Chowdury, Anup and Suman Paul Chowdury. 2010. “Impact of Capital structure on Firm’s Value: Evidence from Bangladesh”, Business and Economics Horizon 3(3): 111-122.

Chugh, Lal C., Joseph W. Meador, Matthew W. Meador. 2010. “Corporate Governance: Shareholder Rights and Firm Performance”, Journal of Business and Economic Research 8(9): 1-12.

Gitman, Lawrence J. 2003. Principles of Managerial Finance. Tenth Edition. Boston: Pearson Education, Inc.

Gitman, Lawrence J. and Chad J. Zutter. 2012. Principles of Managerial Finance. Thirteenth Edition. Boston: Pearson Education, Inc.

Hwang, Heungseun, Moon-Ho Ringgo Ho, and Jonathan Lee. 2010. “Generalized Stuctured Component Analysis with Latent Interactions”, Psychometrika 75(2): 228-242.

Hwang, Heungseun, W.S. Desarbo, and Yoshio Takane. 2007. “Fuzzy Clusterwise Generalized Stuctured Component Analysis”, Psychometrika 72(2): 181-198.

Hwang, Heungsun and Yoshio Takane. 2004. “Generalized Stuctured Component Analysis”, Psychometrika 69(1); 81-99.

Keown, Arthur J., John D. Martin and J. William Petty. 2008. Foundations of Finance: The Logic and Practice of Financial Management. Sixth Edition. New Jersey: Pearson Education, Inc.

Mehta, Anupam. 2012. “An Empirical Analysis of Determinants of Dividend Policy – Evidence from the UAE Companies”, Global Review of Accounting and Finance, 3(1): 18-31.

Moradi, Mehdi, Mahdi Salehi, and Shahnaz Honarmand. 2010. “Factors Affecting Dividend Policy: Empirical Evidence of Iran”, Poslov Na Izvrsnost Zagreb, God (IV): 45-62.

Nisa, M. and Mohammad Nishat. 2011. “The Determinants of Stock Prices in Stock Exchange”, Asian Economic and Financial Review 1(4): 276-291.

Obeidat, Mohammed Ibrahim. 2009. “The Internal Financial Determinants of Common Stock Market Price: Evidence

from Abu Dhabi Securities Market”, Journal of Economic & Administrative Sciences 25(1): 21-46.

Pasaribu, Rowland Bismark Fernando. 2008. “The Influence of Corporate Fundamental to Its Stock Price in Indonesia Public Companies”, Journal of Economics and Business 2(2): 1-21.

Riley, M., R. C. Wood, M. A. Clack, E. Wilkie, and E. Szivas. 2000. Researching and Writing Dissertations in Business Management. London: Thomson Learning.

Seetharaman, A. And John Rudolph Raj. 2011. “An Empirical Study on the Impact of Earning Per Shares of a Listed Bank in Malaysia”, International Journal of Applied Economics and Finance 5(2):


Sharma, Sanjeet. 2011. “Determinants of Equity Share Prices in India”, Journal of Arts, Science, and Commerce 2: 51-60.

Srinivasan, P. 2012. “Determinants of Equity Share Prices in India: A Panel Data Approach”, The Romanian Economic Journal (46): 205-228.

Uwuigbe, Uwalomwa, Olowe, Jimoh Jafaru, and Anijesushola Ajayi. 2012. “Dividend Policy and Firm Performance: A Study of Listed Firms in Nigeria”, Accounting and Management Information Systems 11(3):


Uwuigbe, Uwalomwa, Olowe, Olosegun, and Agu Godswill. 2012. “An Assesment of Determinants of Share Price in Nigeria: A Study of Selected Listed Firms”, Ceconomica 8(6): 78-88.

White, Gerald I., Ashwinpaul C. Sondhi, and Dov Fried. 2003. The Analysis and Use Of Financial Statements. Third Edition. New York: John Willey & Sons, Inc.



  • There are currently no refbacks.