Indonesian Capital Market Research Articles

Cracking the Book Value Mystery: Understanding Earning Per Share, Price Earning Ratio, and Operational Efficiency in IDX80 Enterprises Indonesia

Research Aims: This study aims to elucidate the determinants of book value by investigating the effects of earnings per share (EPS), price-to-earnings (PER) ratios, and operational efficiency among companies listed in the IDX80 index from 2021 to 2023. Design/methodology/approach: The research utilizes a quantitative approach with an explanatory design, analyzing secondary data from the financial reports of 80 companies. Variables like EPS, PER, BV, and NPM are assessed using the Partial Least Squares (PLS) method via SmartPLS to uncover their relationships in the Indonesian capital market. Research Findings: Key findings highlight the significant impact of EPS on share valuation reflected in book value (BV) and the mediating role of NPM in this relationship. The study underscores the complexity of using PER alone to evaluate company worth within the IDX80 index, emphasizing the need for further exploration to enhance investment strategies and financial decision-making. Theoretical Contribution/Originality: This study enhances understanding of equity valuation in Indonesia's capital market by analyzing how EPS, PER ratios, and operational efficiency influence companies in the IDX80 index from 2021 to 2023. It integrates theoretical frameworks like signalling theory and mediation via NPM, showing that EPS significantly impacts share valuation through NPM. The research underscores limitations of using PER exclusively to evaluate company worth, emphasizing the intricate nature of stock valuation in the IDX80 index. Future studies should delve deeper into these factors to improve investment strategies and financial decision-making.

The Effect of Mergers and Acquisitions on the Financial Performance Companies listed on the Indonesia Stock Exchange for the 2020-2022 period

This research aims to determine the effect of mergers and acquisitions on company financial performance in companies listed on the Indonesia Stock Exchange. The data collection method used in this research is a purposive sampling technique, based on existing criteria, there are 30 sample companies. The company's financial performance is measured using financial ratios, namely: Return On Assets (ROA), Current Ratio (CR) and Debt To Asset Ratio (DAR). The analytical method used in this research is the T-test difference analysis and the Wilcoxon signed rank test. The research results show that companies that carry out mergers and acquisitions in 2020-2022 with an average period of 1 year before and 1 year after the merger and acquisition show that there is no difference in profitability as indicated by Return On Assets (ROA), liquidity as indicated by Current Ratio (CR), solvency shown by Debt To Asset Ratio (DAR), before and after mergers and acquisitions. This research was conducted incompanies that carry out mergers and acquisitions in 2020-2022 and are listed on the Indonesian Stock Exchange. This study provides an in-depth understanding of how mergers and acquisitions affect the financial performance of companies in the Indonesian capital market. Therefore, stakeholders such as investors, company managers, regulators and academics can gain a better understanding of the impact of merger and acquisition activities on the Indonesian economy. There has been no research regarding the effect of mergers and acquisitions on financial performance in the 2020-2022 period in Indonesia. This knowledge gap is the reason for conducting this research.

The Impact of Financial Disclosure on Stock Performance of Initial Public Offerings in the Indonesian Capital Market

This research aims to explore whether the proceeds, age, revenue, and underwriter rating of IPO companies affect disclosure; whether disclosure mediates the relationship between the four exogenous variables and underpricing; and whether underpricing mediates the relationship between disclosure and returns. This research uses Partial Least Squares Structural Equation Modelling (PLS-SEM) as the data processing method. Since this research examines interactions between variables, PLS-SEM is an effective data processing method. This research identifies four key exogenous variables: funds raised from the IPO, the age of the IPO company, the income of the companies prior to the IPO, and the ranking of underwriting companies. The research finds that the R-squared of the disclosure variable is 0.0037, or 3.7%, while the Q-squared of the disclosure variable is 0.0039. Meanwhile, the R-squared of the underpricing variable is 0.435, and the Q-squared of the underpricing variable is 0.456. The research also finds that higher proceeds, age, revenue, and underwriter ranking of IPO companies will reduce disclosure. Conversely, higher proceeds and age of the IPO companies will reduce underpricing, while higher revenue and underwriter ranking of the IPO company will increase underpricing. Finally, the research finds that higher disclosure will increase underpricing. Статтю розміщено в рамках грантової програми ГО «НАУКОВО-ОСВІТНІЙ ІННОВА-ЦІЙНИЙ ЦЕНТР СУСПІЛЬНИХ ТРАНСФОРМАЦІЙ» за підсумками Конкурсу індивідуальнихгрантів «Ініціатива підтримки науковців»

Information Asymmetry Effect on Stock Liquidity Effect on Dividend Payout in Market Microstructure in Indonesia

The impact of market microstructure in shaping corporate governance has been distinguished in several previous research. Market Microstructure becomes prominent factor in emerging markets. This study tested the effect of market microstructure, in the scheme of stock liquidity, on dividend payouts. This study has set focus mainly on the impact of stock liquidity on the corporate payout policy. Later, the researcher examined the interaction given to the stock liquidity factor with information transparency and agency problem properties since the researcher believed that transparency is linked to the and, subsequently, affecting the corporate agents. This research examined observations using quantitative research method, Tobit regression on 256 non-financial firms of the Indonesian capital market during 2010-2018. Stock liquidity significantly impacted dividend policy. The result showed robustness with other stock liquidity measures. This study found that information asymmetry and agency problems had a moderation effect on stock liquidity effect on dividend payout. However, the interaction of stock liquidity and disparity of control rights and cash flow rights did not give a moderation effect on the dividend payout policy. The result supports the notion that dividend payout is an outcome of firm good governance and an inverse of dividend signaling theory.

THE IMPACT OF THE PRESIDENTIAL ELECTION ON IDX COMPOSITE PREDICTIONS USING LONG SHORT TERM MEMORY

An analysis of the performance of Indonesia's capital market, or Indonesia Stock Exchange (IDX), shows significant growth in recent years, with market capitalization increasing dramatically from IDR 679.95 trillion in 2004 to IDR 11,674.06 trillion by 2023. The IDX plays an important role in the Indonesian economy by facilitating capital formation and providing opportunities for investors to diversify their portfolios. However, the capital market is vulnerable to political events, such as presidential elections, which can affect national stability and economic performance. An analysis of the stock index performance before the presidential election showed a significant bullish trend. Still, given the considerable impact of political events, such as presidential elections, on financial markets, this study aims to analyze and forecast the performance of the IDX Composite by examining historical data from past election years, we provide insights and predictions in highlighting how the LSTM model accommodates these political factors in its forecasts. IDX Composite closing price forecasting was conducted using the bidirectional LSTM model to anticipate the impact. The analysis results show that this model can predict the weekly closing price of the IDX Composite with an error of 1.04%, with estimated stock price fluctuations in the next 8 weeks in the range of 6619.755 to 6812.722

Company Value Moderates The Relationship Of Profitability, Liquidity, And Political Connections To Stock Returns

TInvestors increasingly demand stock investments, as evidenced by the number of Indonesian capital market investors reaching 10 million in 2022. This surge shows the public's high interest in gaining profits from stock investments, necessitating in-depth research on factors influencing stock returns for optimal profits. This research examines the influence of profitability, liquidity, and political connections on stock returns, using firm value as a moderating variable. Employing a quantitative, descriptive methodology and purposive sampling, 29 firms listed in LQ45 from 2020-2022 were selected. The study uses primary and secondary data, analyzed with Eviews 12 software through a panel data regression model. Findings reveal that profitability positively affects stock returns, while liquidity and political connections do not. However, firm value affects stock returns and can moderate the impact of profitability but not liquidity or political connections.

COMPARISON OF BONDS PERFORMANCE WITH SYARIAH BONDS (SUKUK)

The purpose of this study is to determine the comparison of bond performance with sharia bonds (sukuk) in 2010-2023. This study uses quantitative calculations with a comparative type of research. The data used are sourced from secondary data from OJK. This study uses a population, namely the capitalization of sharia bond performance data (sukuk) compared to the capitalization of bond performance data, using the Sharpe, Jensen method for the 2010-2022 period (monthly data) in the Indonesian Capital Market. Data analysis was carried out using the Sharpe and Jensen methods and using the MANOVA test with the help of the SPSS statistical application program. The results of this study indicate that the performance of sukuk with bonds using the Sharpe and Jensen methods is not significantly different. This shows that the sukuk return and the bonds based on the Sharpe and Jensen methods that will be received will be relatively the same.

CONTRARIAN STRATEGY: EVIDENCE OF PRICE REVERSAL ON WINNER-LOSER PORTFOLIOS

This study aims to analyze the effectiveness of the contrarian strategy by demonstrating the existence of price reversal phenomena in winner-loser stock portfolios on the Indonesia Stock Exchange (IDX). This research differs from previous studies by comprehensively exploring the Indonesian stock market (IDX), which has characteristics distinct from developed countries. Thus, this research contributes new insights to the investment literature in emerging markets. The research approach is quantitative, utilizing monthly data in the form of stock closing prices from all companies listed on the IDX from January 2020 to June 2023, totaling 866 companies, with a selected sample of 670 companies. The hypothesis was tested using an independent sample t-test. The results show that the winner and loser stock portfolios experienced price reversal in the first month after the formation period. However, in the second and third months, the winner stock portfolio did not experience a price reversal but showed significant changes. Meanwhile, the loser stock portfolio experienced price reversals in the first, second, and third months after the formation period. Both portfolios exhibit significant differences in AAR and CAAR values, leading to the general conclusion that price reversal symmetry occurred. Such conditions present opportunities for investors or traders, serving as signals to make contrarian decisions buying loser stocks or selling winner stocks. This phenomenon also provides evidence of the winner-loser anomaly in the Indonesian capital market.

Uji Teori Institusional: Pengungkapan Emisi Karbon, Leverage, Profitabilitas, dan Nilai Perusahaan

Purpose: This study examines the impact of carbon emission disclosure, leverage, and profitability on firm value using institusional theory Research methodology: The research uses quantitative data from 10 energy companies listed on IDX (Indonesia Stock Exchange) between 2018-2022. The sample technique used was purposive sampling. Panel data regression is employed to analyze the data. Carbon emission disclosure is measured by GRI-305 (Global Reporting Initiative – 305), leverage by DAR (Debt-to-Asset) and profitability by EPS (Earning per Share) as independent variable, then firm value by PBV (Price Book Value) as dependent variable. Results: Carbon emission disclosure has a positive but insignficiant effect on firm value, leverage has a significant negative effect, while profitability shows a negative but insignificant effect on firm value. Limitations: The study’s sample size was limited due to the removal of outliers to meet classical assumption test, which may reduce the sample’s representativeness but improves data analysis quality. Contribution: This research is useful for investors, academics, companies, government, and the general public who want to know the benefits of carbon emissions disclosure, and the level of readiness of the Indonesian capital market in addressing climate change issues and disclosure of carbon emissions by companies.

Does Uncertainty Drive Herding Behavior in Indonesia Stock Exchange

Herding behavior increases along with market risk, corporate uncertainty aggregate uncertainty. This research aims to investigate herding behavior in the Indonesian capital market by considering conditions of uncertainty. There are two uncertainty indicators used in this research, namely stock market volatility and COVID-19. By using daily data from companies listed on the LQ45 index, the research found that herding behavior was not detected when using the basic herding model, but when entering transaction volume variables and lagged dependent variables, we found that there was herding behavior during the 2017-2023 period. Furthermore, by including uncertainty variables, our research found an asymmetry of herding behavior: investors tend to herd when the market experiences high volatility and during the COVID-19 pandemic. Outside of these two periods, we found no empirical evidence of herding behavior in Indonesia. These results strengthen the theoretical framework that high uncertainty triggers herding behavior.

STRENGTHENING THE REGULATORY CONCEPT OF NOTARY SUPERVISION BY THE FINANCIAL SERVICES AUTHORITY IN INDONESIA'S CAPITAL MARKET ACTIVITIES

This study examines the supervision of notaries by the Financial Services Authority in Indonesia's capital market, its implementation, and proposes alternative solutions to strengthen the concept. It provides a comprehensive examination of current supervisory practices, highlighting the effectiveness and challenges of regulatory supervision. The research also proposes alternatives to strengthening the supervisory framework, potentially influencing policy improvements and enhancing governance and integrity of notarial practices.

Investment Knowledge in the Young Generation: A Theory of Reasoned Action Perspective

This study aims to explore the investment knowledge of students from the Faculty of Economics and Business at Universitas Negeri Makassar using the Theory of Reasoned Action framework. Basic investment knowledge is crucial for prospective investors to avoid irrational investment practices, such as gambling, following trends without analysis, falling victim to fraud, and facing significant financial losses. Adequate knowledge, experience, and business instincts are essential for analyzing which assets to invest in within the capital market. Understanding the correct methods of investing is vital to minimize the risk of losses, particularly in stock market investments. While the growth of investors in Indonesia's capital market is promising, the overall interest in investing remains relatively low compared to other countries. This study underscores the importance of enhancing investment education to better prepare young investors. By increasing their financial literacy and decision-making capabilities, we can help foster a more robust investment culture and contribute to the financial well-being of the young generation.

Strategi Berinvestasi terhadap Keberhasilan Investasi Saham Syariah di Pasar Modal Syariah

Stocks and the Indonesian capital market coexisted in Indonesia in 1912, when the Indonesian capital market was first established. An Islamic regulation master named Abdurrahman Isa contends that stock trading exchanges are permitted in religion, including shares gave by banking organizations, where a portion of the exercises are revenue based credit. This is based on the circumstances of Muslims, who, in his opinion, are in a dhorurat state. This study made use of literature research, which uses information from books and other sources to investigate the method for putting into practice investment in sharia stocks as a tool for economic improvement. The English word investment, which means to plant, was adopted from the British language. According to the Dictionary of Capital Market and Financial Terms, "investment" refers to putting money or capital into a business with the intention of earning a profit. The Capital Market Law regulates the sharia capital market, which is a capital market that does not violate sharia law. In this instance, the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) continues to oversee the sharia capital market. The fundamental difference between the sharia capital market and the conventional capital market is that the sharia capital market must adhere to sharia law in all transaction mechanisms and issuers traded in it. In other words, there is no significant difference between the two markets.

Pengaruh Rasio Keuangan Terhadap Nilai Perusahaan Farmasi di BEI

The current economic situation has created fierce competition among companies to increase their value and appear attractive to investors. This study aims to determine the impact of financial ratios (liquidity, profitability, and solvency) on the value of pharmaceutical companies listed on the IDX. Multiple linear regression analysis methods were used in this study. The results indicated that liquidity positively and significantly affects firm value. In contrast, profitability and solvency have a negative and insignificant impact on firm value. Simultaneously, liquidity, profitability, and solvency collectively significantly influence firm value. Public interest statements This study is valuable for understanding how financial ratios affect the value of pharmaceutical companies listed on the IDX. By analyzing liquidity, profitability, and solvency ratios, this study helps investors and managers make better-informed decisions. Investors can evaluate financial health and growth potential, while managers can pinpoint areas that require improvement. This research is anticipated to enhance the transparency and efficiency of the Indonesian capital market, particularly in the pharmaceutical sector.

The Influence of Earning Per Share (EPS) and Price Earnings Ratio (PER) on Stock Prices in the Food and Beverage Sector on the Indonesian Stock Exchange (BEI) for the 2015-2019 Period

The objective of this study is to examine the impact of earnings per Share (EPS) and Price Earnings Ratio (PER) on the stock prices of companies in the food and beverage industry listed on the Indonesia Stock Exchange (BEI) from 2015 to 2019. EPS is utilized as a metric to gauge the profitability of each share, whereas PER characterizes the market's assessment of the earnings generated per share. The research employed a descriptive verification analysis method, utilizing a sample of seven prominent organizations within the researched sector.The data utilized is derived from the yearly financial reports of each company, specifically secondary data. The investigation employed multiple regression approaches to examine the hypothesis regarding the impact of EPS and PER on stock prices. The test utilizes the coefficient of determination to ascertain the extent to which the regression model can account for the fluctuations in stock prices.The research findings indicate a substantial correlation between EPS (Earnings Per Share), PER (Price Earnings Ratio), and firm share prices within the food and beverage industry on the IDX (Indonesia Stock Exchange). The R^2 value of 0.753 suggests that 75.3% of the changes in stock prices can be accounted for by the independent variables, EPS and PER. In this industry, share prices are primarily influenced by the profitability per share and market valuation.In addition, this study emphasizes that additional variables not investigated in this research can significantly impact stock prices, including macroeconomic conditions, market sentiment, government regulations, and other external factors. Stable macroeconomic conditions can lead to more favorable circumstances for increased stock values, whereas government policy or market sentiment alterations can profoundly influence a company's stock performance.The recommendations derived from this study are intended for investors and corporate executives operating in the food and beverage industry on the IDX. Investors are advised to consider the earnings per share (EPS) and price-to-earnings ratio (PER) components of their fundamental analysis to make better-informed investment choices. It is recommended that companies prioritize enhancing their financial performance and ensuring openness in their financial reporting to boost market trust and raise the value of their shares.Subsequent investigations might broaden the range by including supplementary variables like Dividend Yield or Return on Equity (ROE) while doing a more extensive analysis of qualitative elements that impact market perceptions of EPS and PER. This research contributes to understanding the factors that impact share prices in the Indonesian capital market, particularly within the food and beverage industry.

Analysis of key influencing factors on the financial performance of Jakarta Islamic Index 30 industrial firms

Purpose The purpose of this paper is to investigate the impact of size, asset quality, asset management, financial risk, gross domestic product and inflation rate on the financial performance of companies listed on the Jakarta Islamic Index of 30 industrial firms. Design/methodology/approach Based on the selected criteria, this study analysed an unbalanced panel of data from 30 industrial companies on the Indonesian capital market that are members of the Jakarta Islamic index. Profitability is measured using the dependent variables return on assets (ROA), return on equity (ROE) and stock prices. The influence of explanatory variables of internal factors, namely, size, asset quality, asset management, financial risk, gross domestic product and inflation is investigated using pooled OLS, fixed and random effect estimation. Findings The empirical findings indicate that the scale of a company has a significant impact on its performance, asset quality, asset management and financial risk. GDP has a substantial impact on financial performance, particularly as measured by ROA and ROE. This study’s ramifications have substantial effects on a broad spectrum of stakeholders. The results of this study provide the general public and investors with a greater understanding of the factors that influence a company’s performance on the Jakarta Islamic Index 30. Research limitations/implications The implication of this research is that a deeper comprehension of the factors that influence the financial performance of companies within industrial sectors that follow Islamic finance principles can help design more effective strategies and policies. Practical implications This research has significant practical implications in a number of crucial areas. First, it provides a comprehensive comprehension of the company’s financial performance in the industrial sector in accordance with Islamic finance principles. Second, the research findings provide more precise guidance on how company size, asset quality and macroeconomic variables influence the performance of Indonesia's financial market. Originality/value The study’s authenticity and value hold considerable importance. This study introduces novel perspectives on the assessment of corporate financial performance within industrial sectors through the lens of Islamic finance principles. It offers valuable insights that have not yet been extensively investigated by scholars in the field.

The institutionalisation of XBRL in a developing capital market: the Indonesian regulators’ and filers’ perspective

Purpose Drawing on institutional theory analytical perspectives of theorisation and translation, this study aims to explore the institutionalisation of eXtensible Business Reporting Language (XBRL) in Indonesia from a regulatory and filer perspective. Design/methodology/approach The Indonesian capital market offers a unique case of the integration of XBRL regulatory reporting between multiple regulators and a transfer from capital market regulation to state-level regulation. This study uses semi-structured interviews with key actors employed with Indonesian XBRL-regulatory bodies and listed companies (filers). Findings External pressures, monitoring issues and tensions in the implementation process were instrumental in the theorisation and translation of XBRL in Indonesia. Specifically, the findings show that choices made with respect to XBRL regulation and implementation created tensions between XBRL reporting fulfilling a monitoring purpose and serving stakeholders’ interests. The findings also indicate that the Indonesian approach to XBRL regulation and implementation had distinct characteristics compared to XBRL implementation in other jurisdictions. Practical implications This study emphasises the necessity for robust regulatory support and strict enforcement to navigate the complexities and tensions arising from a multi-regulatory approach. Additionally, it stresses the importance of firms’ readiness and expertise in XBRL as more sophisticated implementation strategies are considered. Originality/value Using the analytical lens of theorisation and translation, the study provides a deeper understanding of how a globally diffused accounting technology was institutionalised and legitimised in a developing country. Specifically, this study explains why a conversion approach to XBRL implementation was favoured and how XBRL implementation and reporting were managed and coordinated between different Indonesian regulators.

The Effect of Profitability, Liquidity and Company Size on Capital Structure in Companies Listed on the Indonesian Stock Exchange

This study investigates the effect of profitability, liquidity, and firm size on the capital structure of firms listed on the Indonesia Stock Exchange (IDX). Using data from manufacturing firms, the study found that profitability and liquidity have a negative and significant influence on capital structure decisions, with more profitable firms tending to rely on less debt and more internal sources of funds. However, firm size does not consistently have a significant negative impact on capital structure, suggesting that external factors such as capital market conditions and economic policies have a more dominant role in determining a firm's capital structure. These results provide important insights for financial practitioners in designing appropriate funding strategies to maximise firm value and effectively manage financial risk in the Indonesian capital market.

The Influence of Earnings Management on the Value Relevance of Accounting Information

This research aims to investigate the influence of earnings management practices on the value relevance of accounting information in the Indonesian business environment. The research method used is qualitative with a library study approach and document content analysis. Data was obtained through in-depth interviews with related parties such as auditors and financial managers, as well as analysis of the contents of documents in the form of financial reports and company meeting notes. The research results show that earnings management practices can reduce the value relevance of accounting information by affecting the quality of information conveyed in financial reports. Practices such as increasing revenue estimates or delaying expense recognition can cloud the picture of a company's true performance, which in turn affects economic decision making. These findings emphasize the importance of transparency and integrity in accounting practices to maintain the value relevance of accounting information for stakeholders. The implication of this research for accounting theory is the need to pay attention to earnings management practices within a broader theoretical framework regarding the integrity of accounting information. From a practical perspective, companies need to increase awareness of the importance of honest accounting practices and comply with applicable standards to minimize unethical earnings management practices. This implication is also relevant for regulators in strengthening regulations related to financial reporting in order to maintain the integrity of the capital market in Indonesia.

Gold characteristics as safe haven and assets diversification for Sharia stocks in Indonesia

Purpose This study aims to determine the role of gold as a safe haven, hedge and asset diversification for Shariah stock in conditions of extreme stock market declines. Design/methodology/approach Quantitative approach is used by applying the threshold generalized autoregressive conditional heteroskedasticity (TGARCH) model to capture bad or good news in the market condition and quantile regression method to obtain the extreme values of stock returns in several market conditions. The data used were the daily closing price of gold and the Jakarta Islamic Index from January 2011 to October 2022. Findings The average conditions show gold does not have a hedge property and only acts as an asset diversification. Second, gold has a substantial, safe haven property in every economic condition. However, the safe-haven property of gold seemed to weaken during the most extreme stock market decline. Thus, although gold appears as a safe haven and asset diversification, it remains a risky investment and only provides a minor role in the face of the extreme stock market period. Practical implications This research provides a discourse and literature for Islamic investors and investor managers to choose the right investment instrument in various economic conditions where gold has a function as diversification and safe haven in their asset portfolio under any other asset portfolio conditions which is also in line with modern portfolio theory. For policymakers, the study can be used as material for consideration in making policies related to the accessibility of gold as an investment instrument. Originality/value This study presents the originality by using the price of Antam gold as a proxy for gold investment during the latest research year data and focusing on case studies in Islamic capital market in Indonesia. Moreover, this research provides quantile regression that sharply discussion in various economics condition.