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The Effect of Financial Distress Probability, Firm Size and Liquidity on Stock Return of Energy Users Companies in Indonesia

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  • Khaira Amalia Fachrudin

    (Faculty of Economics and Business, Universitas Sumatera Utara, Medan, Indonesia.)

  • M. Fikri Ihsan

    (Faculty of Economics and Business, Universitas Sumatera Utara, Medan, Indonesia.)

Abstract

Stock return can be one of the representations of a company s performance in investment. This study aims at investigating the factors determining the stock return of the largest users of energy production of oil, gas and coal classified in the manufacturing companies at Indonesia s Stock Exchange for the period of 2016-2018. It involved 134 companies classifies as the largest users of energy production of oil, gas and coal classified as the manufacturing entries in IDX that were used as the target of the population and all were selected for the sample of this study. Financial distress probability, firm size, liquidity and price to cash flow from operating activities ratio become independent variables. The result of multiple linear regression indicated that financial distress probability and liquidity influence significantly on the stock return at alpha five percent in this energy user companies. It implies that the companies must continually maintain their financial health and also invest their idle cash in order to generate the return.

Suggested Citation

  • Khaira Amalia Fachrudin & M. Fikri Ihsan, 2021. "The Effect of Financial Distress Probability, Firm Size and Liquidity on Stock Return of Energy Users Companies in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 11(3), pages 296-300.
    • Handle: RePEc:eco:journ2:2021-03-36
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    References listed on IDEAS

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    Cited by:

    1. Ali, Muhammad Kashif & Zahoor, Muhammad Khurram & Saeed, Asif & Nosheen, Safia & Thanakijsombat, Thanarerk, 2023. "Institutional and country level determinants of vertical integration: New evidence from the oil and gas industry," Resources Policy, Elsevier, vol. 84(C).
    2. Pande Ketut Rheynaldi & Endri Endri & Minanari Minanari & Putri Andari Ferranti & Subur Karyatun, 2023. "Energy Price and Stock Return: Evidence of Energy Sector Companies in Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 31-36, September.
    3. Mohammad Aladwan & Omar Alsinglawi & Omar M. Alhawatmeh & Mohammad Almaharmeh, 2023. "Corporate Financial Performance and the Intervening Role of Energy Operating Costs: The Case of Jordanian Electricity Sector," International Journal of Energy Economics and Policy, Econjournals, vol. 13(5), pages 202-212, September.

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    More about this item

    Keywords

    Financial distress probability; liquidity; stock return;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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