This study aims to examine the effect of investment opportunity and business risk on dividend policy, as well as the moderating role of institutional ownership in these relationships. The research is grounded in the pecking order theory and the clientele theory. The population comprises companies listed on the Indonesia Stock Exchange (IDX) from 2021 to 2023 in the healthcare, basic materials, consumer non-cyclicals, industrials, and consumer cyclicals sectors. A total of 311 firms were selected using a non-probability purposive sampling method. Data were collected through non-participant observation by downloading financial reports from the official IDX website (www.idx.co.id), and analyzed using Moderated Regression Analysis (MRA). The results indicate that both investment opportunity and business risk have a negative effect on dividend policy. Furthermore, institutional ownership strengthens the negative effect of business risk on dividend policy. However, institutional ownership does not moderate the relationship between investment opportunity and dividend policy. These findings support the pecking order theory in terms of internal financing preferences and the clientele theory regarding how dividend policies may vary based on the preferences of majority shareholders, particularly institutional investors.
Dewi et al. (Tue,) studied this question.