The Role Of Leverage In Moderating The Influence Of Institutional Ownership And Dividend Policy On Firm Value

Abstract

This study empirically investigates the effect of institutional ownership and dividend policy on firm value, with leverage serving as a moderating variable. The analysis is based on data from 20 industrial sector companies listed on the Indonesia Stock Exchange (IDX) over the 2017–2023 period, totaling 140 observations. Grounded in Signaling Theory, the study employs Moderated Regression Analysis (MRA) to evaluate the proposed relationships. The findings reveal that institutional ownership and dividend policy do not have a statistically significant direct effect on firm value. In contrast, leverage demonstrates a significant positive impact and significantly weakens the relationship between institutional ownership and firm value, indicating that high debt levels may reduce the effectiveness of governance signals perceived by investors. Conversely, leverage does not significantly moderate the effect of dividend policy on firm value, suggesting that dividend signals are assessed independently of capital structure. These results underscore the critical role of financial structure in shaping market perceptions and contribute to a deeper understanding of the contingent nature of financial signaling in emerging markets.