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Financial Ratio and Stock Returns in Indonesia Equity Markets: A Signaling Theory Approach

In: Proceedings of the International Conference on Business, Accounting, Banking, and Economics (ICBABE 2022)

Author

Listed:
  • Rini Agustin

    (Universitas Muhammadiyah Semarang, Department of Accounting)

  • Nurcahyono Nurcahyono

    (Universitas Muhammadiyah Semarang, Department of Accounting)

  • Andwiani Sinarasri

    (Universitas Muhammadiyah Semarang, Department of Accounting)

  • Fatmasari Sukesti

    (Universitas Muhammadiyah Semarang, Department of Accounting)

Abstract

Stock prices that have fluctuated have caused the stock return that investors will receive to be negligible during the Covid 19 pandemic. The decrease in stock prices can result from stock revenues later, which will be given to investors, and whether the financial ratios and mechanisms of good corporate governance can increase or result in the stock revenues given to investors. This study empirically examines the effect of return on assets, revenue on equity, net profit margin, current ratio, debt to equity ratio, debt to total asset ratio, earning per share and good corporate governance mechanisms on stock revenues moderated by an independent commissioner. A quantitative study was used 28 industries listed on index LQ45 that was stable during 2017–2021 were used as the population in this study. Furthermore, data analysis was carried out with multiple linear regression using SPSS. The results of this study found that the variables revenue on assets, net profit margin, current ratio, debt to total asset ratio, earning per share, and audit committee can have a negative effect on stock revenues. revenue equity, debt to equity ratio can have a positive result on stock revenues, and independent commissioners can moderate the revenue equity and current ratio.

Suggested Citation

  • Rini Agustin & Nurcahyono Nurcahyono & Andwiani Sinarasri & Fatmasari Sukesti, 2023. "Financial Ratio and Stock Returns in Indonesia Equity Markets: A Signaling Theory Approach," Advances in Economics, Business and Management Research, in: Chih Wen-Hai & Ali Mursid (ed.), Proceedings of the International Conference on Business, Accounting, Banking, and Economics (ICBABE 2022), pages 277-292, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-154-8_25
    DOI: 10.2991/978-94-6463-154-8_25
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