Analysis of the Influence of Funding Decisions, Dividend Policy, and Market Volatility on the Financial Performance of Manufacturing Companies in Indonesia Post-Pandemic

Abstract

The post-pandemic era presents unique challenges and opportunities for companies to manage their financial performance, especially in the manufacturing sector which is sensitive to economic fluctuations. This research aims to comprehensively analyze the impact of financing decisions (capital structure and debt), dividend policy, and market volatility on the financial performance of manufacturing companies in Indonesia. Employing a quantitative approach with panel data from 150 manufacturing companies listed on the Indonesia Stock Exchange (IDX) during the 2020-2024 period, the analysis was conducted using a panel data regression model. Financial performance was measured using Return on Assets (ROA) and Tobin's Q to reflect both accounting and market perspectives. The results indicate that optimal financing decisions (moderate debt ratios) are positively correlated with both ROA and Tobin's Q. Stable dividend policies were also found to have a positive impact, signaling positively to investors. Market volatility, while presenting risks, showed a more significant negative impact on Tobin's Q compared to ROA, reflecting market sensitivity to uncertainty. Specifically, an interaction effect between financing decisions and market volatility was found to moderate financial performance. These findings provide crucial insights for financial managers in formulating resilient financing strategies and dividend policies amidst post-pandemic market dynamics, as well as managing volatility risks to achieve sustainable financial performance.