THE EFFECT OF FINANCIAL PERFORMANCE ON FIRMS VALUE OF BANKING COMPANIES LISTED ON INDONESIA STOCK EXCHANGE FROM 2017 UNTIL 2021

• Main Author: Raniya Hameeda, Nadia
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/68065
• Institution: Institut Teknologi Bandung

This research aims to understand the effect of financial performance, namely the Capital Adequacy Ratio (CAR), Return on Assets (ROA), Operational Efficiency Ratio (OER), Net Interest Margin (NIM), and Non-Performing Loan ratio (NPL) towards the value of the banking companies, measured by the Price to Book Value (PBV), from the year 2017 until 2021. This research is using a quantitative analysis approach with causality research strategy and the type of data used in this research is time-series and cross-section data that are secondary data, namely the financial indicators of the banking companies sourced from financial databases. The population of this research is banking companies that are listed under the Indonesia Stock Exchange (IDX) under the Financials sector and the Main board. Purposive sampling technique is used in this research, and 13 companies with 65 numbers of observations are collected for data analysis. This research applied panel data regression analysis, using Random Effect model. The results show that there is a significant and positive relationship between the ROA and the NIM towards the value of the company, measured by the PBV of the banking companies. Meanwhile, there is no significant influence of the Capital Adequacy Ratio (CAR), Operational Efficiency Ratio (OER), and Non-Performing Loan ratio (NPL) toward the PBV of the companies. The managers of the banking companies can seek to focus on optimizing the profitability of the companies, due to the positive and significant relationship between the ROA and NIM to the firm’s value.