Proxy For Profitability Research Articles

Pengaruh Solvabilitas dan Profitabilitas terhadap Audit Delay pada Perusahaan BUMN Periode 2019-2023

This quantitative research aims to determine the factors that influence audit delay, namely solvency and profitability in BUMN listed on the Indonesia Stock Exchange (BEI) during the 2019-2023 period with a population of 55 observations. Meanwhile, the sample that met the criteria was 24 observations. The data collection technique was carried out using secondary data from annual reports of state-owned companies during the observation period. The research instrument uses debt to asset ratio (DAR) as a proxy for solvency and return on assets (RoA) as a proxy for profitability, and audit delay data. Data analysis was carried out using multiple linear regression. The results of this research reveal that simultaneously there is a significant influence between the solvency and profitability ratios on audit delay in state-owned companies in Indonesia during the 2019-2023 period. However, partially there is a significant treatment in the opposite direction of the two ratios; The solvency ratio has a negative effect, while the profitability ratio has a positive effect on audit delay.

Investigating the Effect of Capital Expenditure and Age on Profitability: A Study of Listed Manufacturing Firms in Bangladesh

The study has been conducted to investigate whether firms’ capital expenditure and age have any impact on profitability. To serve this purpose, around 38 listed manufacturing companies of Dhaka Stock Exchange have been considered. Capital expenditure and age of the business since its commencement have been considered as independent variables where return of assets (ROA) as a proxy for profitability has been considered as dependent variable. To normalize the variability, the study used the natural logarithm of the said variables. To consider the confounding effect, the study also considered five control variables: total assets as proxy for firm size, debt to total assets as proxy for financial leverage, GDP growth as proxy for economic growth, the presence of COVID and one period lag on dependent variable. Based on the results of Hausman test, the study used Random Effect Model. In addition, owing to presence of heteroskedasticity and serial correlation, the study further accommodated Panel Corrected Standard Errors (PCSE) to interpret its findings. The findings of the study suggest that both capital expenditure and age of the firm have positive and significant effect on the profitability of the firms.

The underwriter's conflict of interest and earnings forecast bias in prospectus: Evidence from Hong Kong

About 40% of the firms that go public on the Hong Kong Stock Exchange voluntarily include earnings forecasts in their prospectuses. These forecasts are on average biased downwards by 8% compared to the realized earnings. We hypothesize that the underwriter, in order to increase IPO underpricing and obtain private benefits, pressure managers to low-ball earnings forecasts in the prospectuses. We examine the effect of underwriting commission rate, reputation, and IPO trading commissions on the earnings forecast bias in the prospectuses. We find that underwriting commission rate is negatively associated with the forecast bias. Using the 90-day post-IPO trading volume as a proxy for future trading commissions and profits generated from institutional investors and aftermarket trading activities in general, we document that trading commissions are positively associated with the forecast bias. Further analysis shows that underpricing is positively associated with the forecast bias, but the effect of the forecast bias on underpricing disappears after controlling for the underwriter's trading commission. Overall, these results are consistent with predictions based on the agency theories of underwriter by Baron (1982) and Loughran and Ritter (2002).

Capital and profitability: The moderating role of economic freedom

Using the GMM framework, this paper examines the nexus between capital and profitability in the presence of economic freedom using annual data of US banks ranging from 2002 to 2022. consistent with both the financial stability and regulatory hypotheses, the present study's empirical findings reveal that economic freedom exerts a positive moderating influence on the relationship between bank capital ratio and profitability. The findings are heterogeneous across banks' specific characteristics and market conditions. Furthermore, the results are robust to alternative proxies of profitability. The study's finding is beneficial for policymakers and regulators as liberalization is not always adversely impact the economy; rather, it's a double-edged sword, and they must maintain that delicate balance. The conclusions of this study have meaningful implications for senior bankers and policymakers when formulating strategies for preserving bank value. Specifically, it highlights the importance of considering the interactive role of economic freedom in their decision-making process.

IMPACT OF CAPITAL STRUCTURE ON PROFITABILITY: AN EMPIRICAL SEARCH

In today's corporate world, every company needs to survive in the long run by becoming financially sustainable. Firms must cope with a variety of financial variables for a successful long-term financial existence, where the two most crucial issues are capital structure and profitability. The finance manager must design the capital structure in such a way so that the company can earn a good profit to satisfy all of its stakeholders. A modest attempt has been made in this study to understand how far profitability is affected by the capital structure design. This study considered 100 manufacturing companies of India's National Stock Exchange (NSE) as the sample companies. The study has been purely based on secondary data, and the required data has been gathered from the 'CAPITALINE' database for a period of 10 years, i.e., from 2011 to 2020. This study considered ROIC ( proxy of profitability) as the dependent variable and leverage (proxy of capital structure) as the independent variable. Besides, some control variables such as firm size, Tangibility, uniqueness, growth, and firm quality have also been taken into account. A dynamic panel data regression model has been used in this study to examine the relationship between profitability and capital structure. The findings of the study clearly revealed that profitability is affected by the choice of capital structure design. KEYWORDS: Capital Structure, Leverage, Profitability, ROIC, Dynamic Panel, NSE

Determinan Nilai Perusahaan LQ 45 dengan Ukuran Perusahaan sebagai Pemoderasi

This study investigates the role of firm size as a moderating of profitability, leverage on firm value. This study uses Price Book Value (PBV) as a proxy for firm value in LQ45 index companies for the 2017-2021 period which has not been used by previous research. The findings of this study indicate that Return on Assets and Return on Equity as proxies for profitability have no effect on firm value. Then, company size has a significant effect on firm value, while the Debt to Asset Ratio and Debt to Equity Ratio as leverage proxies have no effect on firm value. Firm size can weaken the effect of profitability on firm value. Firm size can also moderate the relationship between leverage and firm value. The findings of this study imply that company size plays an important role in attracting investors, but if it is not accompanied by good financial performance management, it will actually lead to negative perceptions about the company's financial performance.

Natural Capital Accounting and Profitability of Listed Manufacturing Firms in Nigeria

This study examines the impact of natural capital accounting on profitability of listed manufacturing firms in Nigeria and it adopts correlational research design. The population of the study consists of sixty-four manufacturing firms listed on the Nigerian Exchange Group (NGX) for thirteen years between 2010- 2022. The study used the purposive sampling method, to obtain a sample of forty-nine manufacturing firms that meet the criteria. Return on Asset (ROA) is considered as proxy of profitability while natural capital accounting index (scores) were generated using 7 items in line with International Initiative on Integrated Reporting Council (IIRC). Data for the study was extracted from the annual reports and accounts of the sampled firms for the period under study, and analyzed using multiple regressions. The result revealed that natural capital accounting has significant and positive effect on return on asset (ROA). Based on these findings, this study therefore, concludes that natural capital accounting influence profitability of listed manufacturing firms in Nigeria. This study recommends among others that, listed Nigerian manufacturing firms should emphasize more on reporting their natural capital accounting as it is capable of improving their profitability. This can be achieved through proper and accurate reporting of their environmental information, because it affects profitability significantly. Also, in line with global best practices, regulatory agencies in Nigeria should issue reporting standards that would make reporting of all sustainable capital items and particularly environment/natural capital accounting mandatory.

Financial Performance and Stock Price: Evidence from Listed Manufacturing Companies in Sri Lanka

Despite several studies on the effect of financial performance in terms of profitability on stock price, existing literature provides contradictory conclusions regarding this association. Therefore, the main purpose of this study is to explore the effect of financial performance in terms of profitability on stock price, with special reference to the listed manufacturing companies in Sri Lanka from 2011 to 2021. Earnings per Share (EPS), Return on Equity (ROE), and Return on Assets (ROA) were used as proxies of profitability since the current study aims to investigate the aspect of profitability, while the average share price was used as a proxy of stock price. Moreover, the study used three firm-specific control variables, namely, Dividend per Share (DPS), Firm Size (FS), and Debt to Equity (DE). The data was collected from the published annual reports of 29 listed manufacturing companies out of 34 listed manufacturing companies. By employing fixed effect panel regression analysis, this study aims to examine whether there is an effect of financial performance in terms of profitability on stock price. Accordingly, the findings reveal a statistically significant positive effect on stock price in terms of ROA and EPS, despite ROE indicating a negative effect on stock price. Moreover, somewhat simultaneous and divergent results were indicated by the control variables. Accordingly, FS and DE demonstrated a positive association with stock prices. Contrary to this, DPS does not indicate any association with stock price. Moreover, the findings of the study provide insights to investors for encouraging investments and maximizing their investment income, to listed companies for making policy decisions connected with stock price and other investments, and to policymakers for formulating appropriate policies to promote stock investment while regulating credit policies and interest rates.

The effect of corporate governance on firm performance: perspectives from an emerging market

The aim of this research is to inspect whether Corporate Governance (CG) attributes such as Audit Meeting Frequency, Ownership Concentration, Board Meeting Frequency, Foreign Ownership, Institutional Ownership, Board Gender Diversity, Audit Committee Size, Board Size, Audit Reputation and CEO Compensation affect firms’ performance in Pakistan. This research employed the pooled least square method to estimate the association among attributed of CG and firm performance measures (Return on Asset and Tobin’s Q) by selecting the Cement Sector and Energy sector companies listed in Pakistan Stock Exchange (PSX) during 2009–2022. A substantial result is that the energy sector’s CG system does not differ from the cement sector. Tobin’s Q is lesser than ROA, suggesting the same condition as companies in the cement sector. On average, firms in the energy sector are older than the firms in the cement sector. It contradicts the result of profitability proxies of the energy sector. Being older firms, the profitability proxies show lower returns as compared to cement sector firms. Pakistan needs a uniform CG code and the need for good CG practices for specific approaches of firms. This study enhances the literature in CG domain by investigating the impact of CG processes in Pakistani firm’s performance. In Pakistan, there are studies available on the topic but the comparison between the selected two industries with such a large data set are the unique elements of the current research. In prior studies, the time interval was also short, only five years. Further, the firm performance was measured by an accounting-based tool and did not include a market-based tool for performance, as well as variables for CG were also limited.

The Effectiveness of Liquidity, Solvency, and Profitability Ratios against the Stock Returns of the Company

Objectives: A company’s bottom line analysis is one of the essential factors that should be done by the shareholders when deciding to invest their shares in the company. It gives a clear view of whether shares will be bought, sold, or retained. This research aims to reveal the effectiveness of liquidity which is represented by current ratio (CR) solvency in the form of debt-to-equity ratio (DER) and profitability proxies by return on equity (ROE) towards Stock returns in service sector Industries.Methodology: The research population used consists of 76 service sector firms that are active in the property, real estate, and building construction sectors that are registered at the Indonesia Stock Exchange. The purposive method is used as the sampling technique with a total sample of 22 service companies. The data used in this study were gathered from financial reports during 2016-2020. Panel data regression is performed while the analysis technique is processed through E-views 9.Finding The results indicate the implementation of the fixed effect model has found that liquidity in this case is the current ratio and profitability which is represented by ROE showed that variables do not affect stock returns while solvency which is represented by debt-to-equity ratio has an impact on the stock returns. The current ratio does not affect the return on equity, while the debt-to-equity ratio has a negative effect on return on equity. The current ratio and debt-to-equity ratio mediated by return on equity do not affect stock returns.Conclusion: High liquidity indicates an increase in company performance but in this case, liquidity is still not considered as a determining factor for investors in investing because investors are more focused on the use of capital and debt.

Pengaruh Capital Intensity Ratio dan Profitability Terhadap Tax Avoidance (Studi Empiris pada Perusahaan Manufaktur yang Terdaftar di Bursa Efek Indonesia Periode 2016-2018)

This study aims to determine whether the Capital Intensity Ratio and Profitability proxy with ROA have a significant effect on Tax Avoidance in Manufacturing Companies Listed on the Indonesia Stock Exchange for the 2016-2018 period, either partially or simultaneously. The type of data used in this study is quantitative data sourced from the company's financial statements. Sources of data in this study is secondary data. The population in this study are manufacturing companies listed on the Indonesia Stock Exchange totaling 160 companies. The sampling technique used purposive sampling technique according to predetermined criteria. Based on predetermined criteria, a sample of 36 companies was obtained. The analytical method used in this study is multiple linear regression analysis and hypothesis testing using t test and f test. The results of this study indicate that partially Capital Intensity Ratio has no significant effect on Tax Avoidance and Profitability has a significant effect on Tax Avoidance. While simultaneously Capital Intensity Ratio and Profitability have a significant effect on Tax Avoidance.

Do competition and market structure affect sensitivity of bank profitability to the business cycle?

This study aims to determine whether competition and market structure explain heterogeneity in the cyclicality of bank profitability. To answer this question, we consider a large panel of individual bank-level data covering over 8000 banks in more than 100 countries. This study controls for market power and market structure as proxies for the competitive environment and net interest margin (NIM), as well as return on assets (ROA) and return on equity (ROE) as proxies for bank profitability. The results show that decreased competition is related to an increase in the procyclicality of NIM and ROA. Therefore, our results are consistent with the competition–stability perspective. A perfectly competitive environment is associated with the enhanced procyclicality of NIM and ROA in high-income countries, and with the declined procyclicality of all profitability measures in low-income countries. Market structure does statistically significantly affect profitability but seems is important only for the procyclicality of ROE.

Analisis Kinerja Keuangan Pada Perusahaan Manufaktur Sub Sektor Makanan dan Minuman yang Terdaftar di Bursa Efek Indonesia

This study aims to determine the analysis of liquidity (CR) and Solvency (DER) variables on financial performance (ROA) in food and beverage sub-sector manufacturing companies listed on the Indonesia Stock Exchange for the 2019-2021 period. This data collection uses secondary data in the form of financial statements of consumer goods industry companies. This type of research uses quantitative research methodology. The population in this study is the consumer goods industry and the sample of the 2019-2021 research period. The population is 15 food and beverage sub-sector manufacturing companies listed on the Indonesia Stock Exchange for the 2019-2020 period. With 11 samples selected using purposive sampling techniques. The quantitative results of the classical assumption test are in the form of Normality, Multicolonicity, and Heteroscedasticity tests. This analysis method uses Multiple Linear regression techniques. With coefficient test, determination and t test. The results showed that the Liquidity variable (CR) partially had a significant effect on Financial Performance in the Profitability (ROA) proxy and the Solvency (DER) variable had no significant effect on Financial Performance in the Profitability (ROA) proxy.

The effect of covid-19 on the profitability of commercial banks: evidence from South Asian region

This study aims to examine the effects of COVID-19 on the profitability of commercial banks in the South Asian region. This study investigates and evaluates licensed commercial banks' financial performance in Sri Lanka, Bangladesh, and Pakistan. The data were drawn from quarterly financial statements over 15 quarters from 2018 Q1 to 2021 Q3. Twelve commercial banks in Sri Lanka and Bangladesh and ten commercial banks in Pakistan have been taken as the sample for this study. Capital adequacy ratio, Loan to deposit ratio, Non-performing loan ratio, and COVID-19 are the independent variables. Return on assets and Return on equity are the profitability proxies, and bank size and bank ownership are the control variables. Panel regression was used to analyze the data. The findings revealed that the COVID-19 pandemic significantly impacts the profitability of commercial banks in Sri Lanka. And on the contrary, the COVID-19 pandemic significantly negatively impacts the profitability of commercial banks in Pakistan. Furthermore, Pakistan's banking sector was found as the primarily affected banking sector in the South Asian region in terms of profitability during the pandemic. The outcomes of this study suggest that banks should frame more into risk management strategies and Basel III requirements. In addition, irrespective of the size of the banks, the managers should not underplay the importance of capital adequacy. Hence consistent evaluation of the CAR is vital. And also, this study recommends that bank managers should focus more on credit risk management, particularly in turbulent conditions.

Profitabilitas dan Manajemen Laba selama Pandemi Covid-19: Studi Kasus pada Bank di Indonesia

This research investigates the relationship between profitability and earnings management in Indonesian banks listed on the Indonesia Stock Exchange (IDX) during the Covid-19 pandemic. This article contributes to a novelty by exploring opportunistic behavior during global crisis phenomenon. We use Return on Asset (ROA), Return on Equity (ROE), and Net Profit Margin (NPM) as profitability index and Discretionary Accruals (DACC) as earnings management index. The result of this research can be used to elaborate investment decisions making, especially during economic crisis. We collect financial reports of 2020 and 2021 from the Indonesian Stock Exchange (IDX) and get the final data as much as 40 firm year observations.. The result of regression linear analysis using modified jones model shows that all proxies for profitability (ROA, ROE, and NPM) do not have a significant effect on earnings management. These findings indicate that management tendency to manage earnings during a pandemic is not based on profitability intentions, but rather on the desire to survive in the crisis.

Analysis of the Influence of Temporary Syirkah, FDR, and BOPO Funds on Financing Risk and Their Implications on SRB Profitability in Indonesia (2016-2020)

This study aims to analyze the effect of Temporary Syirkah Funds (DST), Financing to Deposit Ratio (FDR), and Operational Income Operating Costs (BOPO) on Financing Risk which are calculated directly, and to analyze the effect of DST, FDR, BOPO and Financing Risk on ROA Sharia People's Financing Banks in Indonesia directly and indirectly. The dependent variable in this study is ROA which is a proxy for profitability and financing risk (RP). While the independent variables are DST, FDR, and BOPO. The analytical method used is Path Analysis or path analysis with the help of SPSS version 22. The data used in this research is monthly time series data from January 2016 – 2020. The object of research is Islamic People's Financing Banks in Indonesia. Based on the calculation, the direct effect of DST on ROA is 14.36%. And the direct effect of DST on Financing Risk is 54%.

Analisis Profitabilitas, Likuiditas, Struktur Modal dan Ukuran Perusahaan terhadap Nilai Perusahaan


 The purpose of this study is to investigate the effects of company size, profitability, liquidity, capital structure, and firm value. The population in this study is listed on the Indonesia Stock Exchange between 2018 and 2021 and consumes beverages in the food subsector. Using a purposive sampling strategy, this research model generated 48 sample data from 12 companies chosen as samples. ROA is used as a proxy for profitability by dividing net income by total assets. The proxy for liquidity is the current ratio, which is the ratio of current assets to current liabilities. The DER proxy, which is the formula for total debt divided by total equity and company size using natural logarithms (total assets), and the PBV, which is the market price per share divided by book value per share, are utilized in the capital structure. Using SPSS (Statistics Product and Service Solution) and assistive technology, multiple linear regression analysis models are utilized for hypothesis testing. Firm value is positively impacted by profitability, liquidity, and firm size, according to the findings of this study, whereas firm value is negatively impacted by capital structure.
 Keywords: Firm Value, Profitability, Liquidity, Capital Structure, and Company Size

The Effect of ECB Unconventional Monetary Policy on Firms’ Performance during the Global Financial Crisis

This study aims to analyse and investigate the most important factors affecting the performance of listed firms in the Athens Stock Exchange, emphasising capital structure, size and sovereign debt rate as a proxy for firms’ borrowing rate. Yet, the most remarkable factor taken into consideration to affect firms’ profitability is the delta of ECB assets as a proxy of the ECB’s strategy during the financial crisis. Indeed, the examination of the ECB’s delta is innovative for such analysis and differentiates this study from previous ones. The survey was conducted for the period 2005–2019, and the sample consisted of 49 firms from all sectors of the economic activity, except for the financial sector, as its companies’ capital structure is subject to supervisory restrictions. Thus, the financial sector’s inclusion in the sample would affect its homogeneity. The sample is divided into two sub periods, based on the statement of ECB’s president Mario Draghi “Whatever it takes,” in 2012, expressing the ECB’s strategy for backing and boosting the Eurozone economy. The empirical approach of our analysis is based on a panel data analysis, which allows the combination of both cross-section and time series data. In addition, we develop, test and analyse four specifications of our main model, each one with a different dependent variable as a proxy for profitability. These variables are EPS (earnings per share), ROE (return on equity), ROA (return on assets) and TOBIN’s Q. Our findings lead to some very interesting conclusions, which in most cases are consistent for the specification of all the examined models. More specifically, the results show a negative influence of debt-to-equity ratio and 10-year Greek yield bond on firms’ profitability regardless of the proxy used (EPS, ROE or TOBIN’s Q), while there is a positive impact of firms’ size and the delta of ECB’s total assets on firms’ profitability. However, the soundest outcome of this study shows that the expansion of the ECB’s balance sheet and the unconventional policy does contribute to the improvement of firms’ performance and economic stability. The findings become even more impressive, considering the turning of ECB’s strategy after the implementation of the unconventional policy in 2012. Our findings are useful for policymakers of international institutions and government authorities as we propose strategies favouring economic stability and economic activity but also for managers and stakeholders who can identify the factors which determine firms’ performance in order to apply the best policies for financing, investments and growth.

The Influence of Social Pressure, Market Pressure, Shareholder Pressure and The Reputation of Public Accounting Firms on Carbon Emission Disclosure

This study aims to examine and obtain empirical evidence regarding the effect of social pressure, market pressure, shareholder pressure, and public accounting firm’s reputation on carbon emission disclosure in non-financial companies in Indonesia. In this study, carbon emission disclosure was used as the dependent variable, while the independent variables of this study are social pressure, leverage and profitability which represent market pressure, market capitalization and ownership concentration as proxies for shareholder pressure, and then public accounting firm’s reputation.This research was conducted quantitative methods. The population in this study are non- financial companies listed on the Indonesia Stock Exchange in 2017-2019. The sample of this study was selected using purposive sampling method to obtain 39 non-financial companies that published sustainability reports and were listed consecutively on the Indonesia Stock Exchange from 2017 to 2019. Multiple regression analysis is the statistical method used to test the hypothesis in this study.The results of this study showed that social pressure have a significant effect on carbon emission disclosure. Meanwhile, market pressure with leverage and profitability proxies, then shareholder pressure represented by market capitalization and ownership concentration, and the reputation of public accounting firms doesn’t have significant effect on carbon emission disclosure.

Is this rating worth it? The benefits of credit ratings in the dynamic tradeoff model

PurposeThis study seeks to identify the main determinants of the optimal capital structure by reexamining the interpretation of the conventional set of explanatory variables used as proxies for the costs and benefits of debt in the context of the dynamic tradeoff theory.Design/methodology/approachThe authors isolate the variation in leverage due to different targets from that caused by deviations by aggregating the data across a dimension identifying firms with similar targets – credit rating category.FindingsContrary to theoretical priors, large and profitable rated firms have lower targets. The authors show that size and profitability proxy for non-financial risk and that, for rated firms, non-financial risk is positively correlated to the optimal leverage. The benefits of a better rating outweigh the costs of foregone tax shields for firms with relatively low non-financial risk. The authors find support for that theory in institutional trading – institutional investors do not punish highly rated firms when credit downgrades occur.Originality/valueThis paper contributes to the capital structure literature by developing a new approach based on data aggregation. This study is the first, to the authors’ knowledge, to find a positive effect of the firm's non-financial risk on target leverage among rated firms. The authors argue that the benefit of a better credit rating is an increasing function of the rating itself. The authors also contribute to the literature on the impact of credit ratings on the capital structure choices of the firm.