The intervening role of capital structure in the impact of funding surplus on dividend payments

This study examines the relationship between funding surplus and dividend payments through capital structure. Research on the relationship between surplus companies and dividend payments is still relatively rare, as the majority of studies on funding surplus are linked to capital structure based on the pecking order theory.This study is the first to examine how dividend distribution differs among companies in Indonesia based on their surplus or deficit funding. This unique approach enriches the analysis by exploring how capital structure affects dividend distribution, contributing to a more thorough comprehension of the factors influencing dividend choices within the Indonesian setting. This analyzes 44 consumer sector manufacturing companies listed on the Indonesia Stock Exchange (BEI) from 2016 to 2021 using panel regression analysis, requiring the selection of a model using path analysis. The main focus, first the role of capital structure as a mediator between funding surplus and dividend payments. Secondly, the influence of funding surplus on dividend payments. The research findings show that surplus funding is a factor that triggers the company's dividend payment policy. When the company has strong internal funding, the company tends to fulfill its dividend by relying on internal funding without considering the composition of its capital structure. Practical implications This study can be used as a reference in determining dividend policy based on the company's funding conditions.