Can the Dividend Payout Ratio Mediate the Relationship Between the Current Ratio, Debt-to-Equity Ratio, and Stock Price?

Abstract

This study examines the influence of the current ratio and debt
to-equity ratio on stock prices, with the dividend payout ratio as
a mediating variable, focusing on companies listed in the LQ45
index on the Indonesia Stock Exchange. The research population
comprised 64 companies, with a sample of 28 firms selected
through purposive sampling. Path analysis and the Sobel Test
were employed to evaluate the mediating effect of the dividend
payout ratio. The results indicate that while the current ratio does
not affect the dividend payout ratio, it has a significant positive
impact on stock prices. Conversely, the debt-to-equity ratio exerts
a significant negative influence on both the dividend payout ratio
and stock prices. Moreover, the dividend payout ratio shows no
significant effect on stock prices and does not mediate the
relationship between the current ratio, debt-to-equity ratio, and
stock prices for LQ45 companies during the 2019–2023 period.