The Effectiveness of Funding Policies, Profitability, and Company Value on Stock Returns in Infrastructure Sector Companies in the Construction Sub-Sector Listed on the Indonesia Stock Exchange (IDX) periode 2020-2024

Agus Budianto Ulil Absyor, Hendar Hendar

Abstract


This study aims to analyze the effect of funding policies (Debt to Equity Ratio/DER), profitability (Earnings per Share/EPS), and firm value (Price to Book Value/PBV) on stock returns in infrastructure companies in the construction subsector listed on the Indonesia Stock Exchange (IDX) for the 2020–2024 period. The phenomenon of differences in stock performance between state-owned and private construction companies is the main focus of this study. This study uses a quantitative method with an explanatory research approach, through multiple regression analysis. Data were obtained from the final annual financial reports and stock prices at the end of the year. In this study, nine companies were included in this study, consisting of six State-Owned Enterprises (SOEs) and three private companies. The results show that DER and EPS have a significant effect on stock returns. DER and EPS also have an effect on PBV. However, PBV does not have a significant effect on stock returns. This means that PBV is unable to mediate the relationship between funding policies and profitability on stock returns. This finding indicates that investors in the construction sector do not consider firm value (PBV) too much in determining investment decisions. On the other hand, the profitability and funding structure aspects are given more attention because they directly reflect the company's potential profits and risks.


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References


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