The Serial Mediation Role of Dividend Policy and Capital Structure in Relationship Between Financial Flexibility and Financial Performance

This research aimed to investigate the serial mediation role of dividend policy and capital structure in the relationship between financial flexibility and financial performance. Population of this research consists of property and real estate companies sector listed on the Indonesia Stock Exchange (IDX) over 13-year period (2010 to 2022). Purposive sampling was used. Based on the determined criteria, 6 companies were chosen as the sample of this research. Data was collected from financial reports provided by IDX website to gather proxies for each variable used. The data analysis utilized descriptive statistical analysis and inferential analysis through Path Analysis and the Sobel test to examine mediation. The results show that of the 10 proposed hypotheses, 4 are not significant: financial flexibility doesn’t significantly affect financial performance, either directly or through capital structure, or through the serial mediation of dividend policy and capital structure. Financial flexibility also doesn’t directly affect capital structure. This provides empirical evidence that managing cash holdings alone, as a risk-free asset, is not sufficient to mitigate risk in generating financial performance, given that property and real estate companies require large capital expenditures due to their inherent characteristics.