Free Cash Flow, Debt Policy and Profitability:  Analysis the Investment Opportunity Set

The main purpose of investors investing in the capital market is to earn profits in the future. Investment is an alternative investment. If investors have excess funds, they will not let their funds idle. Funds can be invested in various forms, such as buying certain assets that tend to increase in price such as equipment, land, or gold or in the form of time deposits in banks, buying stocks and bonds in the financial market. The research objective to be achieved is to provide understanding and knowledge to the public, especially investors and creditors regarding free cash flow, debt policy, profitability and investment opportunity sets that can be used as a reference for further researchers as well as a reference for stakeholders (investors, creditors, and the government) in making decisions. relevant and reliable. The method used is quantitative research with secondary data taken from financial statements at idx with data collection techniques using purposive sampling method. Analysis of the data used is multiple linear regression with panel data. The population in this study is the property and real estate sub-sector listed on the Indonesia Stock Exchange, which was carried out for 3 years of observation, namely 2017-2019 totaling 120 data with 40 companies per year. The results showed that only the debt policy variable proxied by the debt equity ratio had a significant effect on the investment opportunity set, while the free cash flow and profitability variables proxied by the return on assets had an insignificant effect on the investment opportunity set.

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PENGARUH FREE CASH FLOW, INVESTMENT OPPORTUNITY SET, MANAGERIAL OWNERSHIP TERHADAP DIVIDEN POLICY MELALUI DEBT POLICY SEBAGAI PEMEDIASI

WIDYA MANAJEMEN ◽

10.32795/widyamanajemen.v1i2.355 ◽

2019 ◽

Vol 1 (2) ◽

pp. 40-59

Author(s):

Luh Nik Oktarini ◽

Putu Atim Purwaningrat

Keyword(s):

Data Analysis ◽

Cash Flow ◽

Dividend Policy ◽

Stock Exchange ◽

Free Cash Flow ◽

Managerial Ownership ◽

Investment Opportunity ◽

Investment Opportunity Set ◽

Debt Policy ◽

Program Version

The purpose of this study was to determine the effect of free cash flow to debt policy to determine the influence of investment opportunity set against debt policy to determine the effect of managerial ownership on debt policy to determine the effect of free cash flow to the dividend policy to determine the effect of managerial ownership to dividend policy. This research was conducted on manufaktur companies listed in Indonesia Stock Exchange 2011-2015 period. Methods of data collection is done by using the method of documentation. Data analysis with path analysis with AMOS program version 20. The results showed the effect of variable free cash flow to debt policy is significant, effect of variable investment opportunity set against debt policy is significant, the effect of managerial ownership variable against debt policy is not significantly, the effect of variable free cash flow toward dividend policy is not significant, the effect of managerial ownership variable to dividend policy is a significant and indirect influence of the variable investment opportunity set against the dividend policy through debt policy is significant.

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ANALISA FREE CASH FLOW DAN KEPEMILIKAN MANAJERIAL TERHADAP KEBIJAKAN UTANG (STUDI EMPIRIS PADA PERUSAHAAN MANUFAKTUR YANG GO PUBLIC DI INDONESIA)

El Dinar ◽

10.18860/ed.v2i1.2963 ◽

2015 ◽

Vol 2 (1) ◽

Cited By ~ 1

Author(s):

M. Cholid Mawardi

Keyword(s):

Cash Flow ◽

Stock Exchange ◽

Agency Cost ◽

Free Cash Flow ◽

Managerial Ownership ◽

Small Company ◽

Investment Opportunity ◽

Investment Opportunity Set ◽

Independent Variable ◽

Debt Policy

The objectives of this study are : 1) to know the influence of free cash flow to debt policy in the company that have low investment opportunity set, 2) to know the influence of free cash flow to the debt in the big company which have low investment opportunity set, 3) to know the influence of managerial ownership to the debt policy in the small company. This study employs debt as dependent variable and free cash flow and managerial ownership as independent variable. The sample of this study is 36 Indonesia companies listed in the Indonesia Stock Exchange from 2010 to 2013. The results indicate that the companies with low investment opportunity set and high free cash flow tend to use debt to finance companies operation. And managerial ownership has positive correlation to the debt in the small company. It proves that managerial ownership has ability to minimalize agency cost.

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PENGARUH FREE CASH FLOW, FINANCIAL DISTRESS, DAN INVESTMENT OPPORTUNITY SET TERHADAP MANAJEMEN LABA

Jurnal Akuntansi Bisnis ◽

10.30813/jab.v14i1.2458 ◽

2021 ◽

Vol 14 (1) ◽

Author(s):

Sally Irawan ◽

Prima Apriwenni

Keyword(s):

Earnings Management ◽

Cash Flow ◽

Financial Distress ◽

Stock Exchange ◽

Total Sample ◽

Free Cash Flow ◽

Investment Opportunity ◽

Purposive Sampling ◽

Investment Opportunity Set ◽

Positive Effect

ABSTRACT : Stakeholders pay attention to the earnings report, thus encouraging company managers to plan strategies to produce reports expected by stakeholders. Earnings management is one way that can be done. Managers can intervene the earnings management by increasing or decreasing profit in order to achieve a certain level of profit which benefits himself or the company. This study aims to determine the influence of free cash flow, financial distress, and investment opportunity set on earnings management. The research sample consisted of 11 infrastructure, utility, and transportation companies listed on the Indonesia Stock Exchange in 2014-2018 with the total sample of 55 data. This study used a purposive sampling method and was tested with SPSS 22.0 Software. The results show that the data have met the pooling test, classical assumptions and established criteria. The results of the F test show that the earnings management variable is affected simultaneously by free cash flow, financial distress, and investment opportunity set variables. The t test results show that the free cash flow and investment opportunity set have a significant positive effect on earnings management, whereas financial distress does not. In sum, there is enough evidence that free cash flow and investment opportunity set positively affect earnings management, but financial distress does not have enough evidence to influence earnings management.Keywords: Earnings Management, Free Cash Flow, Investment Opportunity Set, Financial Distress. ABSTRAK: Laporan laba menjadi perhatian para stakeholders sehingga mendorong manajer perusahaan melakukan perencanaan strategi untuk menghasilkan laporan yang diharapkan stakeholder. Manajemen laba adalah salah satu cara yang dapat dilakukan. Intervensi manajer untuk melakukan manajemen laba dengan cara menaikkan atau menurunkan laba guna mencapai tingkat laba tertentu untuk menguntungkan dirinya sendiri atau perusahaan. Penelitian ini bertujuan untuk mengetahui pengaruh free cash flow, financial distress, dan investment opportunity set terhadap manajemen laba. Sampel penelitian ini adalah perusahaan infrastruktur, utilitas, dan transportasi yang terdaftar di Bursa Efek Indonesia periode 2014-2018. Total sampel yang digunakan adalah 11 perusahaan dengan data observasi yang diperoleh sebanyak 55. Teknik pengambilan sampel yang digunakan adalah non-probability sampling dengan menggunakan metode purposive sampling dan pengujian yang dilakukan dengan bantuan software SPSS 22.0. Hasil penelitian dari data yang digunakan, untuk uji pooling dan asumsi klasik telah lulus uji dan sudah memenuhi kriteria yang ditetapkan. Hasil uji F menunjukkan bahwa variable manajemen laba dipengaruhi secara simultan oleh variable free cash flow, financial distress, dan investment opportunity set. Dari hasil uji t memperlihatkan hasil bahwa free cash flow dan investment opportunity set mempunyai nilai signifikan positif terhadap manajemen laba, tapi untuk financial distress tidak mempunyai nilai signifikan terhadap manajemen laba. Kesimpulan dari penelitian ini adalah free cash flow dan investment opportunity set berpengaruh positif terhadap manajemen laba, sedangkan financial distress tidak berpengaruh terhadap manajemen laba.Kata Kunci: Manajemen Laba, Free Cash Flow, Investment Opportunity Set, Financial Distress

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THE EFFECTS OF LIFE CYCLE AND FREE CASH FLOW ON DIVIDEND OF AGRICULTURAL COMPANIES THAT LISTED IN INDONESIA STOCK EXCHANGE

Jurnal Social Economic of Agriculture ◽

10.26418/j.sea.v9i2.41821 ◽

2020 ◽

Vol 9 (2) ◽

pp. 121

Author(s):

Helma Malini ◽

Venu Fitratama

Keyword(s):

Life Cycle ◽

Cash Flow ◽

Firm Size ◽

Negative Impact ◽

Stock Exchange ◽

Free Cash Flow ◽

Investment Opportunity ◽

Dividend Payout ◽

Independent Variables ◽

Investment Opportunity Set

Company decision to give profits to their investors is based on several reasons including internal policy from the company. Therefore, this study discusses the effects of life cycle and free cash flow on dividend of agricultural companies that listed in Indonesia stock exchange. Independent variables; used are free cash flow, life cycle, firm size, leverage, assets growth, and investment opportunity set. The population in this study is Agricultural company listed on Indonesia Stock Exchange (BEI) in the period of 2015 - 2018. The sample collected using purposive sampling methods. Total of 21 companies were determined as samples. The method of analysis in this study is panel data regression with basis on fixed effect model. The result of this study indicate that the independent variables of free cashflow, life cycle, firm size, leverage, and investment opportunity set have positive impact toward dividend payout ratio while assets growth has negative impact on dividend payout ratio. The result of determination coefficient shows that the independent variables give affect 63.69% against dependent variable.Keywords: Free cash flow, Life cycle, Firm size, Leverage, Assets growth, Investment opportunity set, Dividend payout ratio, Dividend policy

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The Effect of Firm Sizes, Profitability, Dividend Policy, Asset Structure, Sales Growth and Free Cash Flow on Debt Policy

AMAR (Andalas Management Review) ◽

10.25077/amar.4.1.100-119.2020 ◽

2020 ◽

Vol 4 (1) ◽

pp. 100-119

Author(s):

Ria Nurdani ◽

Ika Yustina Rahmawati

Keyword(s):

Cash Flow ◽

Dividend Policy ◽

Stock Exchange ◽

Secondary Data ◽

Financial Statements ◽

Free Cash Flow ◽

Sales Growth ◽

Manufacturing Companies ◽

Company Growth ◽

Debt Policy

The study aims to examine the effect of company size, profitability, dividend policy, asset structure, company growth and free cash flow on debt policy. The object of this study uses manufacturing companies listed on the Indonesia Stock Exchange. The data used is secondary data in the form of annual financial statements for the 2015-2018 period. The collection technique used in this study was purposive sampling while the data analysis techniques used in this study were descriptive statistics, classic assumption tests, multiple regression analysis and hypothesis testing. The analysis show that the size of the company has a negative and not significant effect on debt policy, profitability has a negative and significant effect on debt policy. Dividend policy variables and asset structure has a negative and significant effect on debt policy. While sales growth and free cash flow has no effect on debt policy.

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Determinan Kebijakan Hutang (Bukti Empiris Pada Perusahaan yang Terdaftar Di Bursa Efek Indonesia)

Jurnal Dinamika Akuntansi dan Bisnis ◽

10.24815/jdab.v4i1.6628 ◽

2017 ◽

Vol 4 (1) ◽

pp. 91-112

Author(s):

Linda Linda ◽

Maya Febrianty Lautania ◽

Muhammad Arfandynata

Keyword(s):

Stock Exchange ◽

Strong Relationship ◽

Negative Influence ◽

Positive Influence ◽

Free Cash Flow ◽

Investment Opportunity ◽

Good Investment ◽

Investment Opportunity Set ◽

Equity Ratio ◽

Debt Policy

The purpose of this study is to examine the influence of asset structure, free cash flow (FCF), and investment opportunity set on debt policy in the LQ-45 company listed in the Indonesia Stock Exchange between 2011 and 2015.The data used in this study obtained from published companyfinancial statements. The sample was selected based on purposive sampling method e.g. 110 observations. The hypotheses were tested by using multiple linear regression analysis.The results of this study demonstrated that the asset structure, FCF, and investment opportunity set both partially and simultaneously determine the Debt to Equity Ratio. Partially, this study found that the asset structure and FCF has a negative influence on debt to equity ratio, while the investment opportunity set has a positive influence on debt to equity ratio. based on these results, the good investment opportunity set have a strong relationship on the level of debt risk.

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Free cash flow effect towards firm value

International Research Journal of Management IT and Social Sciences ◽

10.21744/irjmis.v6n3.643 ◽

2019 ◽

Vol 6 (3) ◽

pp. 108-116 ◽

Cited By ~ 2

Author(s):

Ida Ayu Made Chandra Dewi ◽

Maria Mediatrix Ratna Sari ◽

I.G.A.N Budiasih ◽

Herkulanus Bambang Suprasto

Keyword(s):

Cash Flow ◽

Firm Value ◽

Stock Price ◽

Stock Exchange ◽

Sampling Technique ◽

Free Cash Flow ◽

Stock Index ◽

Investment Opportunity ◽

Dividend Payout ◽

Investment Opportunity Set

A company is established to raise the value of the firm by maximizing profit and shareholder’s wealth. In the capital market, firm value is reflected in the stock price. To raise a firm value, needed to investigate the determinant of firm value. So, this research is aimed to determine the effect of free cash flow on firm value with dividend payout and investment opportunity set as mediator. Population in this research was companies listed on the Main Board Stock Index in Indonesian Stock Exchange for 2013-2017. The sample is 189 observation and it was taken by using purposive sampling technique. Data analysis technique used in this research is path analysis and Sobel test. This research founded that free cash flow has a positive significant effect on firm value and dividend payout, free cash flow has a negative effect on investment opportunity set, dividend payout has a positive significant effect on firm value, and investment opportunity set has a positive significant effect on firm value. Furthermore, dividend payout act as a mediator on the effect of free cash flow on firm value, but investment opportunity unable to mediate the effect of free cash flow on firm value.

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DETERMINAN INVESTMENT OPPORTUNITY SET DAN FREE CASH FLOW SEBAGAI PEMODERASI

Kinerja ◽

10.34005/kinerja.v3i01.967 ◽

2020 ◽

Vol 2 (02) ◽

pp. 135-148

Author(s):

Elan Kurniawan

Keyword(s):

Hypothesis Testing ◽

Cash Flow ◽

Stock Exchange ◽

Free Cash Flow ◽

Retail Trade ◽

Regression Equations ◽

Sales Growth ◽

Investment Opportunity ◽

Investment Opportunity Set ◽

Asset Growth

The purpose of this study is to examine sales growth, earning growth, asset growth influence the Investment opportunity set with free cash flow as a moderating retail trade company listed on the Indonesia Stock Exchange. This type of research is quantitative research, with the population used are all retail trading companies listed on the Indonesia Stock Exchange during the year ie between 2014 and 2017 as many as 11 companies. The sampling technique using purposive sampling method with data analysis techniques, namely multiple linear regression equations with hypothesis testing using SPSS. Based on the results of hypothesis testing, it shows that the sales growth variable has a significant positive effect on the Investment opportunity set but the profit growth and asset growth variable has no significant effect on the Investment opportunity set while the free cash flow moderates significantly positive on the sales growth of the Investment opportunity set.

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Pengaruh Investment Opportunity Set dan Free Cash Flow Pada Kebijakan Dividen dan Nilai Perusahaan

Jurnal Ilmiah Akuntansi dan Bisnis ◽

10.24843/jiab.2016.v11.i02.p01 ◽

2017 ◽

pp. 63

Author(s):

I Gusti Ngurah Putu Adi Suartawan ◽

Gerianta Wirawan Yasa

Keyword(s):

Cash Flow ◽

Firm Value ◽

Dividend Policy ◽

Stock Exchange ◽

Free Cash Flow ◽

Manufacturing Companies ◽

Investment Opportunity ◽

Positive Effects ◽

Investment Opportunity Set ◽

Linear Regression Technique

This research is conducted to find out the effect of investment opportunity set and free cash flow towards dividend policy and its impacts on firm value of manufacturing companies registered in Indonesia Stock Exchange during the period of 2011-2013. The samples of this study are 25 manufacturing companies and they were selected by using purposive sampling method. The data is collected through non participants’ observation. Path analysis which is an extension of the multiple linear regression technique is used to analyze data. Based on the data analysis, it was found that, investment opportunity set has positive effects on dividend policy. It refuses the negative hypothesis, free cash flow has positive effects on dividend policy, investment opportunity set has positive effects on firm value, free cash flow has positive effects on firm value, dividend policy has positive effects on firm value, investment opportunity set has effects on firm value through dividend policy and free cash flow has no effects on firm value through dividend policy.

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ANALISIS PENGARUH INVESTMENT OPPORTUNITY SET, FREE CASH FLOW, RETURN ON ASSET, FIRM SIZE, DEBT TO EQUITY RATIO TERHADAP DIVIDEND PAYOUT RATIO (Studi pada Perusahaan Sektor Keuangan yang terdaftar di Bursa Efek Indonesia (BEI) periode 2012-2016)

Magisma: Jurnal Ilmiah Ekonomi dan Bisnis ◽

10.35829/magisma.v6i1.21 ◽

2019 ◽

Vol 6 (1) ◽

pp. 79-93

Author(s):

Rara Ayu Ratnasari

Keyword(s):

Linear Regression ◽

Multiple Linear Regression ◽

Cash Flow ◽

Firm Size ◽

Stock Exchange ◽

Free Cash Flow ◽

Investment Opportunity ◽

Dividend Payout ◽

Investment Opportunity Set ◽

Equity Ratio

This research was conducted to examine the effect of Investment Opportunity Set, Free Cash Flow, Return On Asset, Firm Size, Debt To Equity Ratio to Dividend Payout Ratio in Financial Sector Companies listed in Indonesia Stock Exchange (IDX) Period 2012-2016. Sampling technique was taken by purposive sampling method. The data were obtained based on the publication of Indonesian Capital Market Directory (ICMD 2017). Obtained a number of samples of 34 companies from 91 companies of the financial sector listed on the Indonesia Stock Exchange 2012-2016. The analysistechnique used is multiple linear regression with the least squares equation and the classical assumption test. Hypothesis test was using f-statistic to test the influence between variables simultaneously and t-statistic to test the partial regression coefficient with 5% confidence level. The results showed that the research data is normally distributed and there is no deviation of classical assumption, it means that the available data have been qualified to use multiple linear regression equation model. Simultaneous analysis result shows that IOS, FCF, ROA, SIZE and DER have an effect on DPR. Partial analysis result show that ROA have a significant positive effect, DER have negative significant effect because the value of significance both < 0,05 whereas IOS, FCF and SIZE have no effect against DPR.

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