Return on Assets, Return on Equity, Net Profit Margin, and Book Value Per Share on The Value of Infrastructure Sector Companies Listed on The Indonesian Stock Exchange
DOI:
https://doi.org/10.37385/ijedr.v5i5.6672Keywords:
Return on Asset, Return in Equity, Net Profit Margin, Book Value Per ShareAbstract
This study aims to identify the effect of Return on Asset (ROA), Return on Equity (ROE), Net Profit Margin (NPM), and Book Value Per Share (BVPS) on firm value in the infrastructure sector listed on the Indonesia Stock Exchange (IDX). The research method used is associative research with data collection techniques through documentation studies using secondary data from the company's published financial statements and other sources. The analysis results show that simultaneously, ROA, ROE, NPM, and BVPS variables have a significant effect on firm value with a contribution of 57.2%. Although partially, these variables do not have a significant effect individually on firm value. This finding supports the signaling hypothesis theory which states that investors consider dividend changes as a signal of good earnings in the future. This study provides a deeper understanding of the factors that influence firm value in the infrastructure sector on the IDX. However, it should be noted that this study has limitations in the use of certain data and analytical methods, so the results should be interpreted in the specific context of this study and can be extended with further research that considers additional factors that may affect the value of these companies.Top of FormBottom of Form.
References
Abor, J. (2005). The effect of capital structure on profitability: An empirical analysis of listed firms in Ghana. Journal of Risk Finance, 6(5), 438-445. https://doi.org/10.1108/15265940510633505
Al-Najjar, B., & Hussainey, K. (2011). Revisiting the capital structure puzzle: UK evidence. Journal of Risk Finance, 12(4), 329-338. https://doi.org/10.1108/15265941111158506
Al-Tally, H. A. (2014). An investigation of the effect of financial leverage on firm financial performance in Saudi Arabia’s public listed companies. Asian Economic and Financial Review, 4(1), 25-38.
Anwar, S., & Sun, S. (2013). Financial development, foreign investment and capital formation in the Gulf Cooperation Council countries. Review of Middle East Economics and Finance, 9(2), 169-200. https://doi.org/10.1515/rmeef-2013-0013
Bhagat, S., & Bolton, B. (2008). Corporate governance and firm performance. Journal of Corporate Finance, 14(3), 257-273. https://doi.org/10.1016/j.jcorpfin.2008.03.006
Chen, C. R., & Steiner, T. L. (1999). Managerial ownership and agency conflicts: A non-linear simultaneous equation analysis of managerial ownership, risk taking, debt policy, and dividend policy. Financial Review, 34(1), 119-136. https://doi.org/10.1111/j.1540-6288.1999.tb00448.x
Demsetz, H., & Villalonga, B. (2001). Ownership structure and corporate performance. Journal of Corporate Finance, 7(3), 209-233. https://doi.org/10.1016/S0929-1199(01)00020-7
Ghosh, A. (2008). Capital structure and firm performance. American Journal of Business, 23(1), 9-15. https://doi.org/10.1108/19355181200800002
Gill, A., Biger, N., & Mathur, N. (2011). The effect of capital structure on profitability: Evidence from the United States. International Journal of Management, 28(4), 3-15.
Ibhagui, O. W., & Olokoyo, F. O. (2018). Leverage and firm performance: New evidence on the role of firm size. North American Journal of Economics and Finance, 45, 57-82. https://doi.org/10.1016/j.najef.2018.02.002
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance, and the theory of investment. American Economic Review, 48(3), 261-297.
Myers, S. C. (2001). Capital structure. Journal of Economic Perspectives, 15(2), 81-102. https://doi.org/10.1257/jep.15.2.81
Rahman, M., & Rahman, A. (2017). The impact of financial leverage on firm performance: Evidence from textile sector of Pakistan. International Journal of Business and Management, 12(8), 174-181. https://doi.org/10.5539/ijbm.v12n8p174
Rajan, R. G., & Zingales, L. (1995). What do we know about capital structure? Some evidence from international data. Journal of Finance, 50(5), 1421-1460. https://doi.org/10.2307/2329322
Singhania, M., & Mehta, P. (2017). Working capital management and firms’ profitability: Evidence from emerging Asian countries. South Asian Journal of Business Studies, 6(1), 80-97. https://doi.org/10.1108/SAJBS-09-2015-0060
Titman, S., & Wessels, R. (1988). The determinants of capital structure choice. Journal of Finance, 43(1), 1-19. https://doi.org/10.1111/j.1540-6261.1988.tb02585.x
Youssef, A. B., Boubaker, S., & Omri, A. (2020). Corporate social responsibility and financial performance: The role of corporate governance. Journal of Business Research, 108, 135-146. https://doi.org/10.1016/j.jbusres.2019.11.027
