The Influence of Profitability and Leverage on Stock Prices with Dividend Policy as a Moderation in Oil and Gas Subsector Companies

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FORMOSA NEWS - Riau - Dividend Policies Cushion Debt Risk on Oil and Gas Stock Prices, Study Finds. Consistent dividend payouts effectively soften the negative impact of high debt levels on stock prices in the energy sector, according to a recent financial study by researchers Fiska Noviana and Maiyaliza from Universitas Swadaya Gunung Jati in Indonesia. Published in 2026, the investigation evaluated financial records from major publicly traded oil and gas companies listed on the Indonesia Stock Exchange between 2020 and 2024. The findings provide crucial strategic insights for equity investors, corporate directors, and market analysts navigating capital structure trade-offs during periods of economic transition and volatile global commodity markets.

The energy sector remains a vital engine for economic growth and national energy security, yet operating within it requires navigating substantial market fluctuations and heavy infrastructure costs. In Indonesia, structural challenges such as falling domestic oil production, fluctuating global prices, and regulatory shifts including mandates for bioethanol blending have heightened operational and financial pressures on energy firms. Companies frequently rely on external debt financing to fund major capital investments, expand distribution networks, or modernize equipment. However, excessive leverage elevates financial distress risks, often leading investors to discount stock valuations. Understanding how corporate governance choices, particularly dividend distribution strategies, can offset these debt-related investor concerns has thus become a critical priority for market participants.

To examine these financial dynamics, Fiska Noviana and Maiyaliza deployed an associative quantitative research design centered on empirical market data. The researchers gathered secondary data from official annual financial reports published on the Indonesia Stock Exchange. Applying a rigorous purposive sampling process, the team selected nine prominent oil and gas companies with complete, uninterrupted financial data over the five-year period from 2020 to 2024, resulting in 45 firm-year observations. The study measured corporate profitability via Return on Equity (ROE), financial leverage via the Debt-to-Equity Ratio (DER), dividend policy through the Dividend Payout Ratio (DPR), and equity performance using annual stock closing prices. The research team processed the dataset using multiple linear regression alongside Moderated Regression Analysis (MRA) to test direct relationships and moderating effects.

The statistical analysis revealed several key empirical findings regarding stock price behavior:

• Profitability Directly Drives Valuation: Return on Equity (ROE) exerts a statistically significant positive effect on stock prices. Companies that efficiently generate net income relative to shareholder equity enjoy higher stock valuations due to stronger investor demand.
• Leverage Suppresses Market Value: Debt-to-Equity Ratio (DER) displays a statistically significant negative relationship with stock prices. Higher reliance on debt financing increases perceived default risk and debt-servicing burdens, prompting market participants to lower their equity valuations.
• Dividends Moderate Leverage Risk: Dividend Payout Ratio (DPR) acts as a significant moderating variable that weakens the negative impact of leverage on stock prices. A firm's commitment to regular cash distributions signals strong underlying liquidity and financial health, reassuring investors even when total debt levels are elevated.
• Profitability Impact Remains Independent: The Dividend Payout Ratio does not significantly moderate the relationship between Return on Equity and stock prices. Equity investors prioritize an enterprise's baseline earning capacity above the specific percentage of profits distributed as dividends.

These findings carry significant practical implications for corporate leaders, investors, and regulatory authorities. For executive management teams in the oil and gas industry, the research underscores that maintaining a stable, reliable dividend policy can serve as a strategic buffer. When energy firms must take on substantial debt to finance infrastructure projects or environmental compliance, consistent dividend payments help maintain investor confidence and stabilize share values. For institutional and retail investors, the study offers a clearer framework for portfolio risk management, demonstrating that debt-heavy energy companies are less financially vulnerable in the equity market if they sustain strong dividend distribution records.

Author Profiles
Fiska Noviana, S.E., M.M. Department of Accounting, Faculty of Economics and Business, Universitas Swadaya Gunung Jati, Cirebon, Indonesia. Expertise: Corporate Financial Analysis, Capital Market Accounting, and Energy Sector Financial Management.
Maiyaliza, S.E., M.Si. Faculty of Economics and Business, Universitas Swadaya Gunung Jati, Cirebon, Indonesia. Expertise: Corporate Finance, Investment Theory, and Governance Strategies.

Source
Fiska Noviana, Maiyaliza. The Influence of Profitability and Leverage on Stock Prices with Dividend Policy as a Moderation in Oil and Gas Subsector Companies. Asian Journal of Management Analytics (AJMA). Vol. 5, No. 3, Tahun 2026 (Halaman 633–648).
DOI : https://doi.org/10.55927/ajma.v5i3.16691 
URL:  https://journal.formosapublisher.org/index.php/ajma