Vol 1 Number 2.

2022
Pp: 91-98
ISSN:2964-2906
e-ISSN; 2964-3635
https://scientium.co.id/journals/index.php/sler

INVESTMENT OPPORTUNITY SET, MULTIPLE LARGE SHAREHOLDER AND CAPITAL

STRUCTURE ON DIVIDEN POLICY THROUGH LIKUIDITY
(Study On Manufacturing Companies Listed On The Indonesian Stock Exchange)

Udyono1, Cepi Pahlevi2, H. M. Sobarsyah3

1Magister Management, Fakultas Ekonomi dan Bisnis, Universitas Hasanuddin.
Email: udyono10@gmail.com
2Magister Management, Fakultas Ekonomi dan Bisnis, Universitas Hasanuddin.

Email:cepipahlevi@gmail.com
3Magister Management, Fakultas Ekonomi dan Bisnis, Universitas Hasanuddin:

Email:msobarsyah@gmail.com

Abstract
This study aims to determine the effect of Investment Opportunity Set, Multiple Large
Shareholders and Capital Structure on Dividend Policy through Liquidity in Manufacturing
Companies in Indonesia. This study uses secondary data by taking data from annual reports
and financial statements of manufacturing companies listed on the Indonesia Stock
Exchange, namely www.idx.co.id. The sampling technique in this study was purposive
sampling so that the number of samples used was 41 with 123 observational data. The data
analysis technique in this study used Multiple Linear Regression Analysis and Moderate
Regression Analysis (MRA) using SPSS assistance which was directed to answer the formula
problems or hypotheses that have been formulated in this study and are used to examine the
relationship between Investment Opportunity Set, Multiple Large Shareholders and Capital
Structure variables on Dividend Policy and Liquidity as a moderating variable in
manufacturing companies in Indonesia. The results of this study indicate that Investment
Opportunity Set has a significant positive effect on Dividend Policy, Multiple Large
Shareholders has a significant negative effect on Dividend Policy and Capital Structure has a
significant positive effect on Dividend Policy. In addition, the results of the study using the
Moderate Regression Analysis (MRA) test show that Liquidity moderates the relationship
between Investment Opportunity Sets and Dividend Policy, Liquidity moderates the
relationship between Multiple Large Shareholders and Dividend Policy, and Liquidity also
moderates the relationship between Capital Structure and Dividend Policy.

Keywords: Investment Opportunity Set, Multiple Large Shareholders, Capital Structure, Dividend
Policy, Liquidity

A. INTRODUCTION
The role of the manufacturing industry in contributing to the economy in a country is
quite large, both from the consumer tax recipient sector, trade and the workforce. In fact, this
industry can support a country's economy because the role of manufacturing is very large in
running the wheels of the national economy, even though the variety of these industries is
quite large. The expansion of the manufacturing sector continues to increase and contributes
to the Gross Domestic Product (GDP) and shows an increase from year to year. Throughout
2021, investment in the manufacturing sector will reach IDR 325.4 trillion. This figure
exceeds the manufacturing investment target projected by the Ministry of Industry of around
IDR 280 trillion, and an increase of around 19% from 2020 (IDR 272.9 trillion). 2022 will be

The Scientia Law and Economics Review. Vol 1 No 2 December 2022 91

a year of expansion for the national manufacturing industry, following the increasingly
controlled spread of the Covid-19 pandemic and the downstream project starting to roll.
The explanation above shows that the manufacturing industry contributes greatly to
the Indonesian economy. Then the investment realization for manufacturing companies is
also quite large, so that the absorption of labor is also large. Particularly in the consumer
goods sector, the absorption rate for labor is quite large with a very large trading volume as
well, so it's not surprising that some of these sectors have become the target of investors on
the stock exchange. This phenomenon is interesting to study related to the policies taken by
manufacturing companies, especially regarding the dividend policy set by the company.
One of the decisions that must be considered carefully and in detail by the company is
the decision regarding dividend distribution. Dividend distribution often creates problems
because the company, in this case its management, must decide whether the profits earned
will be retained for investment financing or distributed in the form of dividends to
shareholders. In the distribution of dividends, problems that arise are related to agency
problems (Agency Conflict) because shareholders will pressure company management to
manage the company well to improve shareholder welfare (Imanda & Nasir, 2006). Conflict
is usually based on differences in interests where managers will choose to maintain their
income while shareholders are more interested in getting dividends (Parmitasari, 2016).
There are factors that influence dividend policy, namely the Investment Opportunity
Set (IOS). Investment Opportunity Set is a combination of assets in place and investment
options in the future with a positive net present value (NPV). An increase in a firm's
investment opportunity set results in an increase in the dividend payout ratio and thus an
increase in their dividend yield (Abbott, 2001). In contrast Gaver & Gaver, (1993) believe
that investment and dividend payout are competitors in using the company's cash resources,
it is more likely for companies to reduce their dividend payout to take advantage of the
investment opportunities available to them.
According to Jiang et al., (2018), the existence of multiple large shareholders is one of
the factors that can affect dividend policy in a company. Multiple large shareholders can be
defined as ownership of at least 10% of the company's shares by more than one large
shareholder in a company (Attig, 2009). Research conducted by Jiang et al., (2018), suggests
that multiple large shareholders have a positive effect on the company's dividend policy.
Multiple large shareholders can increase the company's dividend payments because one
large shareholder with another large shareholder can work together to force the company's
management to distribute dividends. In contrast, Faccio et al., (2001), suggested that
multiple large shareholders have a negative effect on the company's dividend policy. This is
because blockholders and controlling shareholders will work together to obtain personal
benefits by holding company profits and not distributing them as dividends.
Capital structure is a comparison or balance of a company's long-term funding as
shown by a comparison of long-term debt to equity Martono and Harjito (2012). According
to Lopollusi, (2013) companies with large amounts of debt use, the greater the obligations
that must be fulfilled by the company. An increase in debt will affect the level of net income
available to shareholders, including dividends to be received because the company will
prioritize paying interest and debt obligations rather than paying dividends.
Another factor that influences dividend policy is Liquidity. Liquidity is defined as the
ability level of a company to be able to pay its debts when they are due (Kasmir 2013). ). The
high liquidity value reflects the company's ability to meet its short-term obligations.
Companies that have a high liquidity value will be considered to have good performance by
investors. Liquidity is one of the manager's considerations when deciding to distribute
dividends. Even though the company earns high profits, when liquidity conditions show
unfavorable conditions, it is likely that the company will not distribute dividends.

92 The Scientia Law and Economics Review. Vol 1 No 2 December 2022

B. METHODOLOGY

In this study the research method used is a quantitative research method. This
research examines the effect of investment opportunity set, multiple large shareholders and
capital structure on dividend policy with liquidity as a moderating variable in manufacturing
companies listed on the Indonesia Stock Exchange in 2019-2021. In this study, the
population of all manufacturing companies listed on the Indonesia Stock Exchange (IDX) in
2019-2021 was used. The sampling technique in this study used a purposive sampling
technique. The purposive sampling technique is a sampling technique for data sources with
certain considerations (Hadi, 2006). The sample criteria are as follows:
1. Manufacturing companies listed on the Indonesia Stock Exchange consecutively for
2019-2021.
2. Manufacturing companies that present their annual complete financial reports in a
row for the 2019-2021 period.
3. Manufacturing companies that generate net profit in a row in the 2019-2021 study
period.
4. Manufacturing companies that pay dividends consecutively in the 2019-2021
period.
5. Manufacturing companies that have complete data used in research
In this study, researchers used multiple linear regression analysis and moderate
regression analysis. Multiple linear regression analysis is measuring the effect of the
independent variables on the dependent variable. This analysis is used to determine the
direction of the relationship between the independent variables and the dependent variable
whether each variable is positively or negatively related. This study uses data processing
methods with the SPSS application program.

C. ANALYSIS AND DISCUSSION

1. Descriptive Statistical Anaysis

Descriptive Statistics

N Minimum Maximum Mean Std. Deviation

IOS 123 .00 6.00 2.0569 1.32009
MLS 123 1.00 4.00 2.7154 .83490
DER 123 1.00 3.00 1.1545 .47963
CR 123 .00 8.00 2.7236 1.56447
DPR 123 5.00 100.00 47.3496 27.13596
Valid N (listwise) 123

Based on the descriptive analysis above, it explains that the Investment Opportunity
Set in sample companies from 2019-2021 has a minimum value of 0.00, while the maximum
value is 6.00, with an average value of 2.0569 and a standard deviation of 1.32009. The
minimum value for Multiple Large Shareholders is 1.00, while the maximum value is 4.00,
with an average value of 2.7154 and a standard deviation of 0.83490. Capital Structure has a
minimum value of 1.00, while the maximum value is 3.00, with an average value of 1.1545
and a standard deviation of 0.47963. Liquidity has a minimum value of 0.00 and a maximum
value of 8.00, with an average value of 2.7236 and a standard deviation of 1.56447.
Furthermore, the Dividend Policy has a minimum value of 5.00 and a maximum of 100.00
with an average value of 47.3496 and a standard deviation of 27.13596.
2. Classical Assumption Test
a. Normality Test

The Scientia Law and Economics Review. Vol 1 No 2 December 2022 93

 One-Sample Kolmogorov-Smirnov Test
Unstandardized
Residual
N 123
Normal Parametersa Mean .0000000
Std. Deviation 23.19641808
Most Extreme Differences Absolute .100
Positive .100
Negative -.071
Kolmogorov-Smirnov Z 1.109
Asymp. Sig. (2-tailed) .171
a. Test distribution is Normal.

Based on the Normality Test using the One-Sample Kolmogorov-Smirnov Test it shows
a significance level of 0.171. So it can be concluded that the data is normally distributed
because it has a significance value of 0.171 greater than 0.05.
b. Multicollinearity Test
Coefficientsa
Collinearity Statistics
Model Tolerance VIF
1 IOS .956 1.046
MLS .979 1.021
DER .858 1.165
CR .850 1.177
a. Dependent Variable: DPR

Based on the results of the multicollinearity test above, where the Investment
Opportunity Set variable (X1) has a tolerance value of 0.956 > 0.10 and a VIF value of 1.046
<10, the Multiple Large Shareholder variable (X2) has a tolerance value of 0.979 > 0.10 and
a VIF value of 1.021 < 10, the Capital Structure variable (X3) has a tolerance value of 0.858 >
0.10 with a VIF value of 1.165 <10 and the Liquidity variable (Z) has a tolerance value of
0.850 > 0.10 with a VIF value of 1.177 <10 Based on these test results it can be seen that the
variable X1, X2, X3 and Z do not have multicollinearity.
c. Heteroscedasticity Test
Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 18.628 6.531 2.852 .005
IOS .468 .984 .045 .476 .635
MLS -.813 1.537 -.049 -.529 .598
DER .083 2.858 .003 .029 .977
CR .388 .881 .044 .441 .660
a. Dependent Variable: APRESID

Based on the results of the heteroscedasticity test above, it shows a significant value of
the Investment Opportunity Set variable (X1) of 0.635 > 0.05, the Multiple Large

94 The Scientia Law and Economics Review. Vol 1 No 2 December 2022

Shareholder variable (X2) of 0.598 > 0.05, the Capital Structure variable (X3) of 0.977 >
0.05 and the variable Liquidity (Z) of 0.660 > 0.05. Based on the results of the Glejser test
above, it can be concluded that there is no heteroscedasticity.

d. Autocorrelation Test
Model Summaryb
Adjusted R Std. Error of the
Model R R Square Square Estimate Durbin-Watson
1 .519a .269 .245 23.58630 2.185
a. Predictors: (Constant), CR, MLS, IOS, DER
b. Dependent Variable: DPR

Based on the results of the autocorrelation test above, where the Durbin-Watson value
is 2.185 for comparison using a significant value of 0.05 or 5%, the number of samples is 123,
the number of independent variables is 3 and the Moderating variable is 1, so k = 4, so from
the Durbin-Watson table we get the Du value is 1.7733 and the dL value is 1.6392. Since the
DW value is greater than the dU value, it can be concluded that the data used does not have
autocorrelation.

3. Hypothesis Test
a. Determination Coefficient Test (R2)
Model Summaryb
Adjusted R Std. Error of the
Model R R Square Square Estimate
1 .519a .269 .245 23.58630
a. Predictors: (Constant), CR, MLS, IOS, DER
b. Dependent Variable: DPR

In accordance with the results of the coefficient of determination test for the multiple
linear equation above, where the Adjusted R Square number indicates the coefficient of
determination or the independent variable in relation to the dependent variable with the
Adjusted R Square number of 0.245 this indicates that the contribution of the independent
variables is Investment Opportunity Set, Multiple Large Shareholders and Capital Structure
and Liquidity on the dependent variable, in this case the Dividend Policy, is 0.245 or 24.5%,
while 75.5% is influenced by other factors.
b. Simultaneous Test (F Test)
ANOVAb
Model Sum of Squares Df Mean Square F Sig.
1 Regression 24190.962 4 6047.741 10.871 .000a
Residual 65645.005 118 556.314
Total 89835.967 122
a. Predictors: (Constant), CR, MLS, IOS, DER
b. Dependent Variable: DPR

Based on the results of the Simultaneous test (Test F) above, it can be obtained:
1. From the ANOVA table where the value of Sig. of 0.000. Decision making seen
from the value of Sig. if the value is <0.05 then the independent variable has a
simultaneous or joint effect on the dependent variable. According to the table
above the value of Sig. of 0.000 <0.05 or 5%, which means that the variables

The Scientia Law and Economics Review. Vol 1 No 2 December 2022 95

 Investment Opportunity Set (X1), Multiple Large Shareholders (X2) and Capital
Structure (X3) have a positive effect simultaneously on the Dividend Payout
Ratio (Y).
2. Comparison of the calculated F value and F table obtained the calculated F value
of 10.871. In accordance with the decision making in the simultaneous test if the
calculated F value> F table then the independent variables have a simultaneous
influence on the dependent variable. According to the table above, the calculated
F value is 10.871 > F table 2.45, according to the basis for decision making, it
means that the Investment Opportunity Set (X1) Multiple Large Shareholder
(X2) and Capital Structure (X3) variables have a simultaneous positive effect on
the Dividend Payout Ratio (Y) .
c. Partial Test (t Test)
Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta T Sig.
1 (Constant) 24.636 10.983 2.243 .027
IOS 7.845 1.655 .382 4.741 .000
MLS -5.766 2.585 -.177 -2.231 .028
DER 11.153 4.806 .197 2.321 .022
CR 3.435 1.481 .198 2.320 .022
a. Dependent Variable: DPR

Based on the results of the Partial Test (t test) above, it can be obtained:
1. The hypothesis test used is by comparing the Sig. with 0.05. In accordance with
the above test results where the significance value (Sig.) Investment Opportunity
Set (X1) is 0.000 <0.05 So it can be concluded that H1 is accepted. Which means
the Investment Opportunity Set (X1) has an effect on the Dividend Payout Ratio
(Y).
2. The significance value (Sig.) of Multiple Large Shareholders (X2) is 0.028 <0.05,
so it can be concluded that H2 is accepted. Which means Multiple Large
Shareholders (X2) has an effect on the Dividend Payout Ratio (Y).
3. The significance value (Sig.) of Capital Structure (X3) is 0.022 <0.05, so it can be
concluded that H3 is accepted. Which means Capital Structure (X3) affects the
Dividend Payout Ratio (Y).
4. Hypothesis test by comparing the value of t count with t table. Look at the t table
distribution where the t table value is 1.98027. And according to the test results
above, it is known that the t values of Investment Opportunity Set (X1), Multiple
Large Shareholders (X2) and Capital Structure (X3) are 4.741, -2.231 and 2.321
> 1.98027, so it can be concluded that H1 H2 and H3 are accepted . Which means
Investment Opportunity Set (X1), Multiple Large Shareholders (X2) and Capital
Structure (X3) have an effect on the Dividend Payout Ratio (Y).
d. Moderate Regression Analysis (MRA)

96 The Scientia Law and Economics Review. Vol 1 No 2 December 2022

 Coefficientsa
Standardized
Unstandardized Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 35.087 4.811 7.294 .000
CR -8.862 5.204 -.511 -1.703 .091
IOS*CR 2.287 .520 .469 4.398 .000
MLS*CR -1.878 .816 -.351 -2.302 .023
DER*CR 12.892 4.773 .695 2.701 .008
a. Dependent Variable: DPR

Based on the results of the Moderate Regression Analysis (MRA) test above, it can be
obtained:
1. Moderating variable 1 (X1*Z) is significant with a regression coefficient of 2.287
and a significance value of 0.000 <0.05. This study interprets that the variable
Liquidity is a moderating variable that strengthens the effect of the relationship
between the Investment Opportunity Set variable and the Dividend Payout Ratio.
So the fourth hypothesis (H4) which states that Liquidity strengthens the effect
of Investment Opportunity Set on the Dividend Payout Ratio is proven and
accepted.
2. Moderating variable 2 (X2*Z) is significant with a regression coefficient of -1.878
and a significance value of 0.023 <0.05. This study interprets that the variable
Liquidity is a moderating variable that strengthens the influence of the
relationship between the Multiple Large Shareholder variable and the Dividend
Payout Ratio. So the fifth hypothesis (H5) which states that Liquidity strengthens
the influence of Multiple Large Shareholders on the Dividend Payout Ratio is
proven and accepted.
3. Moderating variable 3 (X3*Z) is significant with a regression coefficient of
12.892 and a significance value of 0.008 <0.05. This study interprets that the
variable Liquidity is a moderating variable that strengthens the effect of the
relationship between the Capital Structure variable and the Dividend Payout
Ratio. So the sixth hypothesis (H6) which states that Liquidity strengthens the
effect of Capital Structure on the Dividend Payout Ratio is proven and accepted.

D. CONCLUSION

1. The research results obtained for the Effect of Investment Opportunity Set on the
Company's Dividend Policy, namely the Investment Opportunity Set has an effect on
the company's Dividend Policy. In this case the effect is positive, which means that
the higher the Investment Opportunity Set will affect the increase in the company's
dividend distribution, but conversely the lower the Investment Opportunity Set will
affect the decrease in the company's dividend distribution.
2. The research results obtained for the Effect of Multiple Large Shareholders on the
Company's Dividend Policy, namely that the Multiple Large Shareholders have an
effect on the company's Dividend Policy. However, in this case the effect is negative,
which means that the higher the Multiple Large Shareholder, the lower the dividend
distribution of the company, but conversely, the lower the Multiple Large
Shareholder, the higher the dividend distribution of the company.
3. The research results obtained for the effect of capital structure on company
dividend policy, namely capital structure influence company dividend policy. In this

The Scientia Law and Economics Review. Vol 1 No 2 December 2022 97

 case the effect is positive, which means that the higher the Capital Structure, in this
case the Debt To Equity Ratio, will affect the increase in the company's dividend
distribution, but conversely, the decrease in the Debt To Equity Ratio will affect the
decrease in the company's dividend distribution.
4. The results of the Moderated Regression Analysis show that the interaction of
Liquidity and Investment Opportunity Set on the company's Dividend Policy is a
moderating variable with significant results. This means that the hypothesis which
says that Liquidity moderates the effect of Investment Opportunity Set on the
company's Dividend Policy is proven.
5. The results of the Moderated Regression Analysis show that the interaction of
Liquidity and Multiple Large Shareholders on the company's Dividend Policy is a
moderating variable with significant results. This means that the hypothesis which
says that Liquidity moderates the effect of Multiple Large Shareholders on the
company's Dividend Policy is proven.
6. The results of the Moderated Regression Analysis show that the interaction of
liquidity and capital structure on the company's dividend policy is a moderating
variable with significant results. This means that the hypothesis that liquidity
moderates the effect of capital structure on the company's dividend policy is
proven.

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Economic Review, 91(1), 54–78.
Gaver, J. J., & Gaver, K. M. (1993). Additional evidence on the association between the
investment opportunity set and corporate financing, dividend, and compensation
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Imanda, F. P., & Nasir, M. (2006). Analisis Persamaan Simultan Kepemilikan Manajerial,
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