DMO PRICE DISPARITY AND DIVIDEND POLICY ANOMALY AMID THE COMMODITY SUPERCYCLE: A STUDY OF INDONESIA'S COAL MINING SECTOR

Abstract

This study investigates the dividend policy anomaly in Indonesia's coal mining industry during the commodity supercycle (2021-2023), when exposure to dual-price regulatory risk arising from the Domestic Market Obligation (DMO) and Domestic Price Obligation (DPO, US$70/ton) was expected to trigger managerial cash hoarding as predicted by Precautionary Motive Theory. This study contributes a novel measurement by quantifying Price Disparity on a firm-specific basis: the percentage gap between the global Coal Reference Price (HBA) and the DPO ceiling, weighted by each firm's domestic sales proportion extracted from audited geographic segment disclosures. Using panel regression on 13 coal mining firms listed on the Indonesia Stock Exchange from 2018 to 2024, the Fixed Effect Model was selected based on sequential specification tests. Empirical results demonstrate that Price Disparity has a positive and significant effect on the Dividend Payout Ratio, contrary to the direction predicted by Precautionary Motive Theory, leading to the substantive rejection of Hypothesis 1. This finding gives rise to the Regulatory Dual-Stream Hypothesis as a new theoretical contribution: firms exposed to DMO-DPO simultaneously hold a guaranteed domestic revenue stream and a large export windfall, a two-layer structure that stabilizes managerial confidence and accelerates dividend distribution capacity rather than suppressing it. The findings recommend that investors regard DMO-DPO exposure not as negative sentiment, but as a financial stabilizer supporting medium-term dividend yield prospects for domestically-oriented issuers.