Dividend policy is a constant conundrum. According to Modigliani and Miller, in a perfect market, a company's worth is based on its ability to make money and the risk of investing, not on the dividends it pays out. Nonetheless, investors choose dividends over gains that are more unclear and risky in the future, according to Gordon and Lintner. Additionally, according to the signal hypothesis, businesses will give out indications about their state. These indicators may indicate good or terrible news. The amount of current profit that will be distributed as dividends as opposed to being kept to be reinvested in the business is determined by the dividend policy (E. F. Brigham & Joel F. Houston, 2001).

According to signal theory, dividend payments can be utilized to let investors know that the company's financial situation is improving. A company's likelihood of paying dividends will be impacted by its high life cycle ratio, which indicates that it has accumulated a sizable amount of earnings. According to research by Aryani and Dina Patrisia (2021), Chau (2023), and Dwiyanti and Dadan Rahadian (2017), the life cycle significantly and favorably influences dividend policy. Consequently, there is a strong and favorable correlation between dividend policy and life cycle.

H1: For 2020–2023, life cycle has a major favorable impact on dividend policy for property, real estate, and building construction companies listed on the Indonesia Stock Exchange.

A business might have a high growth rate if it has a large range of investment opportunities (Giriati, 2016). According to signal theory, a business that is expanding quickly is sending out a positive signal since it has made a lot of money, which will raise the amount of money that can be distributed as dividends. Investment opportunity set has a favorable and large impact on dividend policy, according to research by Andaswari et al. (2017) and Liong et al. (2023). As a result, there is a strong and favorable correlation between dividend policy and investment opportunity set.

H2: The dividend policy of property, real estate, and building construction companies listed on the Indonesia Stock Exchange for 2020–2023 is substantially positively impacted by the investment opportunity provided.

The manager's choice about the total amount of dividends to be paid has a direct impact on profitability (Lintner, 1956). Investors are alerted to the company's strong financial performance by dividend payments. Businesses that consistently turn a profit typically distribute dividends. There is a positive and significant relationship between dividend policy and profitability, according to research by Gupta et al. (2024), Narindro & Hasan Basri (2019), Chau (2023), and Momany et al. (2024). Profitability and dividend policy are therefore positively and significantly correlated.

H3: For the years 2020–2023, the Indonesia Stock Exchange-listed property, real estate, and building construction companies' dividend policies are substantially impacted favorably by profitability.

According to Modigliani and Miller, debt interest can reduce taxes. The risk and return to shareholders increase with the amount of leverage (Syahyunan, 2013). Dividend payments will decrease as the amount of debt used to build the business increases since more interest will be paid (Silalahi et al., 2021). Additionally, businesses with a lot of debt will decide to pay off their debt instead of dividends. According to (Liong et al., 2023), (Momany et al., 2024), (Narindro & Hasan Basri, 2019), and (Puspitaningtyas Z, 2019), leverage significantly and negatively affects dividend policy. Leverage and dividend policy are hence negatively and fundamentally related.

H4: Leverage significantly negatively affects dividend policy in property, real estate, and building construction companies listed on the Indonesia Stock Exchange for 2020-2023.

Cash flow available for distribution to shareholders is known as free cash flow equity (F. E. Brigham & Michael C. Ehrhardt, 2017). This accessible cash enables the company to pay dividends and is a good indication that it is in sound financial standing. According to (Gupta et al., 2024), (Chau, 2023), and (Dwiyanti & Dadan Rahadian, 2017), free cash flow significantly and favorably influences dividend policy. Consequently, there is a strong and favorable correlation between dividend policy and free cash flow equity.

H5: In 2020–2023, free cash flow equity has a major favorable impact on dividend policy for property, real estate, and building construction companies listed on the Indonesia Stock Exchange.

The conceptual framework proposed in this research can be described as follows:

Figure 1. Conceptual Framework

The Common Effect Model, Fixed Effect Model, and Random Effect Model are the three models used in panel data regression. To choose a model, the Lagrange Multiplier Test, Hausman Test, and Chow Test are performed.

To choose between the Common Effect Model and the Fixed Effect Model for estimation, the Chow Test is used. Table 1 indicates that the Fixed Effect Model is the chosen estimate model because the Chi-square probability value is 0.032 < 0.05.

Table 1. Chow Test Result

Source: Data Processed with EViews

Table 2. Hausman Test Result

Source: Data Processed with EViews

Table 3. Random Effect Model Test Result

Source: Data Processed with EViews

According to the findings of the t-test, the life cycle variable's coefficient value is 189.119 > 0 and its probability value is 0.002 < 0.05. It indicates that, for the 2020–2023 period, the life cycle has a favorable and noteworthy impact on the dividend policy of companies engaged in real estate, building construction, and property on the Indonesia Stock Exchange. The study's findings support signal theory and demonstrate a favorable link. The fact that the corporation pays dividends shows that its finances are doing well. According to the life cycle, a business that has a high life cycle ratio has a sizable amount of cumulative profit. The business is able to pay dividends as a result. The study's findings are consistent with those of studies by Aryani and Dina Patrisia (2021), Chau (2023), and Dwiyanti and Dadan Rahadian (2017), which discovered that the life cycle significantly and favorably influences dividend policy.

According to the t-test results, the investment opportunity set variable's coefficient value is 67.07 > 0 and its probability value is 0.729 > 0.05. It indicates that, for the years 2020–2023, the investment opportunity set has a favorable and negligible impact on the dividend policy of real estate, building construction, and property businesses listed on the Indonesia Stock Exchange. According to signal theory, the study's findings indicate a favorable trend. Businesses that invest have the potential to increase their profits in the future, which means they have bright futures and the capacity to pay dividends. Nevertheless, this variable has no discernible influence. It could be that businesses in this industry need large sums of money to make them withhold profits because they need long-term investment. These businesses are also at risk from frequent changes in regulations. The business will keep enough cash on hand to cover this risk under these circumstances. Therefore, even though this variable theoretically exhibits a positive link, the corporation exercises caution when determining whether to pay dividends. The study's findings contradict those of Andaswari et al. (2017) and Liong et al. (2023), who claimed that the investment opportunity set significantly and favorably influences dividend policy. Nonetheless, it is consistent with the findings of Gupta et al. (2024) and Khan et al. (2022), who discovered that the investment opportunity set had a mildly beneficial impact on dividend policy.

According to the t-test results, the profitability variable's regression coefficient value is 700.321 > 0 with a probability of 0.093 < 0.1. This indicates that dividend policy in real estate, building construction, and property companies listed on the Indonesia Stock Exchange for 2020–2023 is favorably and strongly impacted by profitability. Signal theory explains this favorable association. A company's dividend payments will rise in proportion to its profits. The study's findings are consistent with those of Gupta et al. (2024), Narindro & Hasan Basri (2019), Chau (2023), and Momany et al. (2024), who discovered that dividend policy is positively and significantly impacted by profitability. Therefore, the study's findings support the empirical finding that one of the primary determinants of dividends is profitability.

According to the findings of the t-test, the leverage variable's regression coefficient value is -51.875 < 0 with a probability value of 0.049 < 0.05. The dividend policy of real estate, building construction, and property businesses listed on the Indonesia Stock Exchange for 2020–2023 is therefore adversely and considerably impacted by leverage. Modigliani Miller's capital structure theory with taxes, which holds that employing debt can result in tax benefits through loan interest, is supported by this negative link. Despite these advantages, a high debt load will increase the company's burden and lower after-tax profits. Businesses with a lot of debt will put paying off debt ahead of dividends since it is a commitment to creditors. According to Liong et al. (2023), Momany et al. (2024), Narindro & Hasan Basri (2019), and Puspitaningtyas Z (2019), leverage has a negative and significant impact on dividend policy. These findings are consistent with those of other studies.

The free cash flow equity variable's regression coefficient value, according to the t-test results, is 0.036 > 0 with a Prob value of 0.287 > 0.05. It indicates that, for the years 2020–2023, free cash flow equity has a favorable and negligible impact on dividend policy in companies engaged in real estate, building construction, and property on the Indonesia Stock Exchange. The signal theory, which holds that businesses that pay dividends indicate that they have money available to distribute to shareholders, is supported by the positive correlation seen in this variable. Nevertheless, the study's findings indicated a negligible impact. The business can require a sizable amount of working capital in order to devote free cash flow to long-term initiatives. Businesses in this industry frequently require large sums of money for project development, heavy equipment purchases, site acquisition, and project loan repayment. It demonstrates that the corporation does not base its dividend payment decisions primarily on free cash flow equity. The findings of this study contradict those of Gupta et al. (2024), Chau (2023), and Dwiyanti & Dadan Rahadian (2017), who claimed that free cash flow significantly and favorably influences dividend policy. However, free cash flow equity has a positive and negligible impact on dividend policy, according to research by Rosydah et al. (2023).