THE EFFECT OF FIRM SIZE, LEVERAGE, AND PROFITABILITYTO FIRM STOCK RETURN (CASE STUDY OF BUILDING CONSTRUCTION SECTOR)
Since 2014, when Mr. Joko Widodo was appointed as President of Indonesia, infrastructure development continues to be shown as President Jokowi's main plan in increasing development in Indonesia. As a result, construction companies in Indonesia have clearly benefited from the Government's p...
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| Format: | Theses |
| Language: | Indonesia |
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| Online Access: | https://digilib.itb.ac.id/gdl/view/45927 |
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| Institution: | Institut Teknologi Bandung |
| Language: | Indonesia |
| Summary: | Since 2014, when Mr. Joko Widodo was appointed as President of Indonesia, infrastructure development continues to be shown as President Jokowi's main plan in increasing development in Indonesia. As a result, construction companies in Indonesia have clearly benefited from the Government's plan. Investors certainly want a positive return on funds invested in the company. So to attract investors, a company must be able to increase stock returns as reflected in an increase in the price of its shares and/or dividends distributed by the company.Factors affecting the stock return of the company include the size of the company, leverage, and profitability.
Firm size is measured by calculating the natural logarithm of the firm’s total assets. Leverage is measured by the ratio of debt to equity. Profitability is measured by return on assets ratio which is the ratio of net income to assets. Stock Return is measured by ending stock price plus dividend minus beginning stock price divided by beginning stock price.
This study uses secondary data with research population of construction building’s companies listed in Indonesia Stock Exchange. The sample selection was done by purposive sampling method. This research used a sample of 9 construction companies over the period 2016-2018. Analysis of data used multiple regression analysis. Furthermore, a classical assumption test is performed to determine whether the data is feasible to test.
The results of this research shows that firm size and leverage have a significant effect on stock return, while profitability does not have a significant effect onstock return. The F test shows that firm size, leverage, and profitability simultaneously have a significant effect on stock return. The R-squared shows that 73.41% of the variations in stock return can be explained by firm size, leverage, and profitability, while the remaining 26.69% cannot be explained in this study.
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