Articles

Factors Influencing Company Value on the Indonesian Stock Exchange: Insights from LQ45 Companies (2019-2023)

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This study examines the variables affecting the firm value (Tobin’s Q) of the Indonesian Stock Exchange’s LQ45 Index between 2019 and 2023. We assess sustainability scores (ESG Score) and some financial performances ratios i.e. return on assets (ROA), return on equity (ROE), and debt to equity ratio, whether each respective of these factors influence the firm value (Tobin’s Q) using quantitative analytical data obtained from the Indonesian Stock Exchange website. 41 of the 45 businesses that meet the study’s requirements are the subject of our analysis, yielding 205 samples in total. Eviews version 11 software was used to do multiple linear regression analysis on the data. All the independent factors (X1, X2, X3, and X4) have statistically significant individual effects on the dependent variable, according to our findings, which are based on the t-test results. The probability values for each of these variables are below 0.05. Furthermore, the F-test indicates that the independent factors taken together significantly affect the dependent variable, with a probability value of 0.000. Based on the determination coefficient test, the adjusted R square value is 63.12% which indicates that the independent variable significantly influences the dependent variable.

Impact of Sharia Inclusion and Financial Ratios on Stock Price: An Analysis of Companies Listed in the SRI-Kehati Index (2014-2023)

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This study aims to analyze the impact of Sharia inclusion and financial ratios on the stock performance of companies listed in the SRI-Kehati Index during the period 2014-2019. The SRI-Kehati Index reflects companies committed to socially and environmentally responsible investment. Using panel data regression methods, this study evaluates how financial ratios such as the DAR , P/E , and ROE  affect stock prices. Macroeconomic variables like Gross Domestic Product (GDP) and inflation are used as control variables. The results indicate that being Sharia-compliant doesn’t significantly impact stock prices. Similarly, the DAR didn’t have a significant effect. On the other hand, the return-on-equity ratio had a positive significant impact on stock prices, showing that good management and strong financial health boost investor confidence and market performance. Conversely, the P/E ratio had a negative significant impact, likely because high P/E ratios raise concerns about overvaluation and the sustainability of high stock prices relative to earnings.

The Influence of Sustainability Disclosure on Financial Performance: A Study of Indonesian Firms

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This study examines the correlation between the disclosure of sustainability measures and the financial success of companies in Indonesia. The increasing importance of sustainability disclosure, which includes environmental, social, and governance factors, for firms to demonstrate their dedication to sustainable practices, has generated significant debate on its influence on financial results. This study investigates the impact of sustainability disclosures on the financial performance of companies in Indonesia, thus adding to the existing body of knowledge on this topic. The study utilizes a mixed-method approach, incorporating qualitative content analysis of data extracted from annual reports, as well as quantitative analysis derived from financial statements of publicly traded corporations. The sample consists of companies from three major industry sectors, each demonstrating different levels of quality in disclosing their sustainability practices. Accounting-based indicators like return on assets (ROA) and return on equity (ROE) are used to evaluate financial performance. The findings demonstrate a direct and favorable relationship between the caliber of sustainability disclosures and financial performance, specifically in sectors that are highly responsive to environmental concerns. Companies that have more comprehensive and transparent sustainability reporting processes in these industries generally achieve better performance compared to those with less comprehensive reporting. These conclusions have substantial ramifications for firms, investors, and policymakers. Enhancing sustainability disclosure can enhance a company’s financial performance and act as a significant factor for investment choices, providing information about a company’s dedication to sustainability and related risks. Policymakers can utilize these observations to support the implementation of improved sustainability reporting regulations, thereby fostering sustainable economic growth in Indonesia. Ultimately, the research confirms that Indonesian companies who provide detailed and reliable information on their sustainability efforts have a positive correlation with their financial performance. This emphasizes the significance of improving these practices to achieve both economic prosperity and sustainable development objectives.

Differences in Financial Performance of LQ45 Companies Listed on the Indonesian Stock Exchange during the Covid-19 Pandemic

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The global economy has been hit by a crisis, including the Covid-19 pandemic, which is no different than what Indonesia is experiencing. The pandemic has infected and affected the economic power of all countries. Performance during a pandemic should be studied very diligently. This phenomenon led to the first research on Indonesian companies. The purpose of this study is to determine the company’s performance before the pandemic and during his Covid-19 pandemic. For this, the researcher uses the “strong” firms in the Indonesian capital market – his LQ-45 firms. A total of 45 and 21 companies from various sectors were obtained using a targeted random sampling method. This data is collected through annual financial reporting for the 2018-2019 pre-pandemic and 2020-2021 during the Co-19 pandemic. Variables used to define company performance are current ratio (CR), gearing (DER), total assets turnover (earnings), return on equity (ROE), and earnings per share (EPS) is. Using these variables is suggested by researchers as representative of each company’s financial metrics. The research method used is another test of paired data. A data normality test was previously performed and found that the data used were not normally distributed. Therefore, for further analysis to determine whether there were differences before and during the Covid-19 pandemic, the Wilcoxon paired difference test was used in the analysis. We found no difference in firm performance between CR and DER variables before and during. However, when it comes to revenue, ROE and EPS, there are differences in company performance in the LQ-45. Apart from that, these results also show that business performance has declined during the Covid-19 pandemic.

How Does ESG Score and Board Structure Affect Financial Performance? Evidence from ESG Sector Leaders IDX Kehati

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The rise of sustainable investing, an investing strategy considering ESG (environmental, social, governance) factor of the company has spread worldwide, including in Indonesia. Recent phenomena of minimum percentage of woman on board in state-owned enterprise policy by Indonesia Ministry of State-Owned Enterprise and the new two ESG themed index which consists of state-owned enterprise has intrigued to assess the relationship between board structure towards financial performance of the companies. One of the index is “ESG Sector Leaders IDX KEHATI“ which  comprises of stocks with an ESG performance assessment above their industrial average value. Using ROA and ROE as the dependent variable and ESG and board structure variables and firm size, asset to equity ratio, and firm age as control variables. It is found that ESG has negative non-significant relationship towards both ROA and ROE. Board independence and board gender diversity has positive significant effect towards both ROA and ROE.