Free Cash Flow and Dividend Policy Effects on Debt Policy in Mining Companies

Abstract

This research examines free cash flow and dividend policy influences on debt policy among oil, gas, and coal mining companies listed on the Indonesia Stock Exchange. Utilizing quantitative methodology, data were collected from 21 companies spanning 2021-2023 through purposive sampling, yielding 63 observations. Multiple linear regression analysis reveals free cash flow exerts positive insignificant effects, while dividend policy demonstrates negative significant impacts on debt policy. Simultaneous testing confirms these variables collectively affect debt policy significantly. The adjusted R-squared value of 0.122 indicates a 12.2% debt policy variance explanation by the studied variables, with the remaining 87.8% attributed to unexamined factors. Findings emphasize dividend distribution management and cash flow optimization as critical debt structure strategies within resource extraction industries.