The Price to Book Value Still Influenced by The Main Factors on SDG's?

Abstract

Objectives: This study aimed to obtain empirical evidence and analyze the influence of Return on Assets (ROA), Loan to Deposit Ratio (LDR), and Debt to Equity Ratio (DER) on Price to Book Value (PBV) in state-owned banks listed on the Indonesia Stock Exchange from 2011 to 2021. Theoretical Framework: The research is grounded in financial performance and valuation theories, emphasizing how internal financial ratios impact the market valuation of firms, particularly in the banking sector. Method: This research design is quantitative. The data used in this research comes from financial reports registered on the IDX. The data that has been collected is then analyzed descriptively. Results and Discussion: The analysis revealed that ROA significantly affects PBV, indicating that higher profitability leads to higher market valuation. Conversely, LDR and DER do not significantly impact PBV, suggesting that liquidity and capital structure are not primary determinants of market valuation in the context of these banks. The simultaneous effect of ROA, LDR, and DER on PBV was also observed. Research Implications: These findings suggest that investors and financial analysts should focus more on profitability metrics such as ROA when evaluating the market value of state-owned banks. The insignificance of LDR and DER implies that other factors may play a more crucial role in influencing PBV in this sector. Originality/Value: This study provides updated empirical evidence on the determinants of PBV in the context of Indonesian state-owned banks, contributing to the existing literature on bank valuation and offering practical insights for investors and policymakers.