The Effect of Cost of Capital and Free Cash Flow on Dividend Policy in Energy Sector Companies Listed on the Indonesia Stock Exchange (IDX) for the Period 2021–2024

Chelsi Nindya Maharani; Lintang Venusita

doi:10.63922/ijebir.v5i04.4813

Chelsi Nindya Maharani Accounting Department, Faculty of Economics and Business, State University of Surabaya, Indonesia.
Lintang Venusita Accounting Department, Faculty of Economics and Business, State University of Surabaya, Indonesia.

DOI: https://doi.org/10.63922/ijebir.v5i04.4813

Keywords: Cost of Capital, Free Cash Flow, Dividend Policy, Energy Sector, Panel Data Regression

Abstract

This study aims to examine the effect of cost of capital and free cash flow on dividend policy among energy sector companies listed on the Indonesia Stock Exchange (IDX) over the 2021–2024 period. The research employed a quantitative approach using panel data regression analysis with the assistance of EViews version 13, in which the Common Effect Model (CEM) was selected as the most appropriate model. The sample consisted of 19 companies with a total of 76 observations obtained from annual reports and financial statements. The findings indicate that cost of capital has a negative and significant effect on dividend policy, while free cash flow does not have a significant effect. In addition, profitability as a control variable demonstrates a positive and significant influence. Simultaneously, all three variables in this study are found to significantly affect dividend policy.

References

Arhinful, R., Mensah, L., Amin, H. I. M., & Obeng, H. A. (2024). The influence of cost of debt, cost of equity and weighted average cost of capital on dividend policy decision: evidence from non-financial companies listed on the Frankfurt Stock Exchange. Future Business Journal, 10(1), 1–24. https://doi.org/10.1186/s43093-024-00384-8

Arini Arthatami, A., Herawati, R., Suhartono, E., & Oktafiyani, M. (2024). Analisis Dampak Leverage, Pertumbuhan Perusahaan, ROA, dan FCF Terhadap Kebijakan Dividen (Studi Kasus Pada Sektor Financials di BEI Periode 2019–2022). Jurnal Manajemen Sosial Ekonomi (DINAMIKA), 4(1), 180–191.

Darmawan. (2019). Manajemen Keuangan: Memahami Kebijakan Dividen Teori dan Praktiknya di Indonesia.

de Souza Junior, W. D., Hijazi, M. M., & da Silva, T. P. (2024). Determinants of Dividend Payout Policy: More Evidence From Emerging Markets of G20 Bloc. International Journal of Finance and Economics, 1–12.

Diedrich, R., Dierkes, S., & Gröger, H. C. (2022). A note on the cost of capital with fixed payout ratios. Review of Quantitative Finance and Accounting, 59(4), 1559–1575.

Fadilah, S. N., & Venusita, L. (2024). CEO Power dalam Kaitannya dengan Nilai Perusahaan. Jurnal Akuntansi AKUNESA, 12(3), 226–237.

Farooq, O., & Jabbouri, I. (2015). Cost Of Debt And Dividend Policy. Journal of Applied Business Research, 31.

Ghozali, I. (2016). Aplikasi Analisis Multivariate dengan Program IBM SPSS 23 (8th ed.). Badan Penerbit Universitas Diponegoro.

Ghozali, I. (2018). Aplikasi Analisis Multivariate dengan Program IBM SPSS 23 (8th ed.). Badan Penerbit Universitas Diponegoro.

Gordon, M. J. (1959). Dividends, Earnings, and Stock Prices. The Review of Economics and Statistics, 41(2), 99–105.

Habibie, F. A., & Triani, N. N. A. (2022). Faktor–Faktor Yang Mempengaruhi Ketepatan Waktu Pelaporan Keuangan Pada Tahun 2015–2017. Jurnal Akuntansi AKUNESA, 10(2), 36–45.

Hariyanur, R. (2022). The effect of investment and financing decision, dividend policy and cost of capital on Indonesian firm value.

Januarsi, Y., & Sanusi, F. (2024). Profitability and dividend policy: How does free cash flow explain this relationship? Jurnal Siasat Bisnis, 28(1), 56–70.

Jensen, M. C. (1986). Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers. The American Economic Review, 76(2), 323–329.

Jensen, M. C., & Meckling, W. H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3(4), 305–360.

Kesuma, W., Bisnis, F., & Ali, U. D. (2025). Dividends and Attention: Herding, Neglect, and Distraction Among Indonesian Retail Investors. 6(1), 176–190.

Lestari, H. S., Effendi, H. R. T., & Latiefa, F. A. (2021). Pengaruh Struktur Kepemilikan Terhadap Kebijakan Dividen Perusahaan Manufaktur Yang Terdaftar Di BEI. Jurnal Ekonomi, 26(3), 345.

Lintner, J. (1962). Prices and The Supply of Capital to Corporations. The Review of Economics and Statistics, 44(3), 243–269.

Malau, Y. N., Andini, C. S., Angelicca, & Ginting, W. A. (2024). The Influence of Net Profit, Free Cash Flow, Net Working Capital, Funding and Profitability on Dividend Policy. Mount Hope Economic Global Journal (MEGA), 2(1), 131–137.

Min, C. K. (2010). Estimation of SEs for heteroscedastic and cross-sectionally correlated data. Applied Economics, 42(14), 1825–1832.

Nabhani, A. (2024). Sektor Energi Paling Royal Bagikan Dividen. Neraca.

Nadila, C., & Taqwa, S. (2024). Pengaruh Struktur Kepemilikan dan Free Cash Flow terhadap Kebijakan Dividen. Jurnal Nuansa Karya Akuntansi, 2(2), 132–146.

Natasha, V., Hawa, F., Nisa, C., P, S., & Pandin, M. (2025). Analisis Hubungan Antara Cost of Debt, Cost of Equity, dan Weighted Average Cost of Capital (WACC) dalam Keputusan Investasi. Jurnal Ekonomi, Manajemen, Akuntansi dan Keuangan, 6(3).

Nela Nur Faridah, & Rediyanto Putra. (2024). Pengaruh Struktur Kepemilikan dan Struktur Modal terhadap Kebijakan Dividen dengan Nilai Perusahaan sebagai Variabel Moderasi. Jurnal Riset Ekonomi dan Akuntansi, 2(4), 224–242.

Oktananda, M. R., & Rini, P. (2025). Determinan Kebijakan Dividen pada Perusahaan Sektor Energi. Kajian Ekonomi dan Akuntansi Terapan, 2(2), 76–88.

Pratiwi, V. M., Wijaya, A. L., & Paramitasari, R. (2022). Dividend Policy and Firm Value in Indonesia: The Moderating Role of Capital Structure. CECCAR Business Review, 3(3), 62–72.

Ratnasari, D., & Nuswantara, D. A. (2020). Pengaruh kepemilikan institusional dan leverage terhadap penghindaran pajak (tax avoidance). AKUNESA: Jurnal Akuntansi UNESA, 9(1), 1–10.

Sawal, N. S., Ohorella, R. W. U., & Meliana. (2025). The Influence of Ownership Structure, Capital Structure, Investment Opportunities on Dividend Policy and Company Value. Journal of Contemporary Accounting, 7(3), 239–253.

Soeiswanto, C. C., Karamoy, H., & Weku, P. (2024). Pengaruh Free Cash Flow, Profitabilitas, dan Likuiditas terhadap Kebijakan Dividen pada Perusahaan Food and Beverage yang Terdaftar di BEI Periode 2019–2022. Jurnal Riset Akuntansi, 24(2), 168.

Subramanyam. (2014). Financial Statement Analysis (11th ed.). McGraw-Hill Education.

Sugiyono. (2013). Metode Penelitian Kuantitatif, Kualitatif, dan R&D. Alfabeta.

Sulistyowati, T., Anwar, K., & Pardosi, P. (2025). A Systematic Literature Review on Dividend Policy: Theories, Determinants, and Firm Outcomes. Journal EScience Humanity, 5(2), 338–364.

Sumartana, I. G. A., & Dewi, S. K. S. (2024). The Influence Of Free Cash Flow, Profitability and Growth Opportunity On Dividend Policy. International Journal of Management Research and Economics, 2(3), 486–508.

Suriani, N. P., & Wirawati, N. G. P. (2025). The Effect of Profitability, Leverage, and Free Cash Flow on Dividend Policy with Good Corporate Governance as a Moderating Variable. International Journal of Economics, Accounting and Management, 2(2), 128–137.
Susanah, L., & Ananda, N. A. (2022). Pengaruh Free Cash Flow, Ownership Structure, Growth Opportunity dan Profitabilitas terhadap Kebijakan Dividen. Jurnal Ekonomi dan Bisnis Indonesia, 7(2), 17–22.
Trinh, Q. D., Haddad, C., & Tran, K. T. (2022). Financial Reporting Quality and Dividend Policy: New Evidence from an International Level. International Review of Financial Analysis, 80, 102026.
Vogelsang, T. J. (2012). Heteroskedasticity, Autocorrelation, and Spatial Correlation Robust Inference in Linear Panel Models with Fixed Effects. Journal of Econometrics, 166(2), 303–319.
Wooldridge, J. M. (2010). Econometric Analysis of Cross Section and Panel Data.