Abstract
The aims of this study are to investigate the effect of Debt to Equity Ratio and Return on Equity on stock returns with dividend policy as an intervening variable on the property and real estate companies in Indonesia. We collected annual data for eighteen property and real estate companies in Indonesia from the Indonesia Stock Exchange over the period of 2014-2018. We applied multiple linear regression model using SPSS and the Sobel test. Our analysis results found that Debt to Equity Ratio (DER), Return on Equity (ROE), and Dividend Payout Ratio (DPR) have a positive and significant affect on stock returns, both partially nor jointly. Furthermore, the result of Sobel test revealed Dividend Payout ratio (DPR) can be mediate the relationship of Debt to Equity Ratio (DER) and and Return on Equity (ROE) on stock returns. Based on these findings, we concluded that Debt to Equity Ratio (DER) and Return on Equity (ROE) have direct and indirect effects on Stock Return in 18 Indonesia’s property and real estate companies.
Highlights
Economic development at this time resulted in increasingly fierce business competition
It can be seen that the coefficients of Debt to equity Ratio (DER) and Return on Equity (ROE) are positive and statistically significant influences Dividend Payout Ratio (DPR)
This result shows that a rise 1% of Debt to equity Ratio (DER) will cause Dividend Payout Ratio (DPR) increases 0.38%, vice versa
Summary
Economic development at this time resulted in increasingly fierce business competition. The profits earned by property companies listed on the Indonesia Stock Exchange (IDX) are experiencing a decline in aspects of their financial statements. This resulted in a lot of impacts experienced by the company. There is a depreciation in the rupiah and an increase in fuel prices, which has caused uncertainty and rising inflation. This has resulted in doubts and delays in investing in the private sector and eroding national economic resilience (Pratiwi, 2018)
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