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The effect of profitability, liquidity, and capital structure toward stock returns: A study on plantation companies listed in IDX

Author

Listed:
  • Yoel Silver
  • Christina Tri Setyorini
  • Umi Pratiwi

Abstract

This study aims to examine the impact of profitability, liquidity, and capital structure on stock returns. Signaling theory is utilized as the theoretical foundation for this research. A quantitative approach is employed, employing regression analysis, with the population data consisting of plantation sub-sector companies listed on the IDX during the period from 2016 to 2021. The sample selection was conducted using purposive sampling, resulting in 90 samples from 15 companies. Based on the results obtained using EViews 12, it is revealed that profitability has a significant positive influence on stock returns. However, liquidity and capital structure do not have a significant effect on stock returns. The findings suggest that investors should carefully consider the profitability ratio, as a higher profitability ratio is associated with a greater rate of return. Furthermore, businesses should evaluate their capital utilization to avoid bankruptcy and assess their debt levels. This research contributes to the existing literature by focusing on the plantation sub-sector, an area that has received limited attention from previous researchers.

Suggested Citation

  • Yoel Silver & Christina Tri Setyorini & Umi Pratiwi, 2023. "The effect of profitability, liquidity, and capital structure toward stock returns: A study on plantation companies listed in IDX," Journal of Contemporary Accounting, Master in Accounting Program, Faculty of Business & Economics, Universitas Islam Indonesia, Yogyakarta, Indonesia, vol. 5(1).
    • Handle: RePEc:uii:jcauii:v:5:y:2023:i:1:id:27444
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