Analysis of the Effect of Financial Performance on the Stock Return of Go Public Insurance Company in the Indonesia Stock Exchange

Oct 13, 2025 by wbrum.org 58 views

Analysis of the Effect of Financial Performance on the Stock Return of Go Public Insurance Company in the Indonesia Stock Exchange

Introduction

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a wide range of companies listed, including insurance companies. Go Public Insurance Company is one of the insurance companies listed on the IDX, and its stock return is a crucial indicator of its financial performance. This study aims to investigate the effect of financial performance on the stock return of Go Public Insurance Company on the IDX. The study uses financial ratio analysis, including Cash Ratio, Earning Per Share (EPS), Price Earning Ratio (PER), Debt to Equity Ratio (DER), Return on Investment (ROI), and Return on Common Equity (ROCE), to analyze the relationship between financial performance and stock returns.

Literature Review

Financial performance is a critical factor in determining the stock return of a company. It is a measure of a company's ability to generate profits and create value for its shareholders. Financial ratios, such as cash ratio, EPS, PER, DER, ROI, and ROCE, are commonly used to evaluate a company's financial performance. These ratios provide insights into a company's liquidity, profitability, efficiency, and solvency, which are essential factors in determining its stock return.

Research Methods and Analysis Results

This study uses descriptive and statistical analysis to analyze the effect of financial performance on stock returns. The hypothesis test was carried out using an individual significant test (T test) and a significant simultaneous test (F test) with an error rate (α) of 5%. Data were analyzed using SPSS 16.00 for Windows software.

Significant Test Results

The results of the simultaneous test (F test) show that financial performance together has a positive and significant effect on the stock returns of Go Public Insurance companies on the IDX. That is, changes in cash ratio, EPS, PER, DER, and ROCE together have a significant impact on changes in stock returns.

However, individual test results (T test) indicate that only the price earning ratio (PER) variable has a significant influence on stock returns. This means that only changes in the PER that have a significant effect on stock returns, while other variables do not show a significant effect.

Further Analysis

The results of this study indicate that PER is a key indicator that affects the stock returns of Go Public Insurance companies on the IDX. This shows that investors tend to give a higher value to insurance companies with lower PER. The low PER indicates that investors expect company profitability in the future to be higher.

Other Factors that Influence Stock Returns

This research only focuses on the influence of financial performance on stock returns. Other factors that are not considered in this study, such as macroeconomic conditions, market sentiment, and government policy, can also affect stock returns. For example, changes in interest rates, inflation rates, and government policies can impact the stock returns of insurance companies.

Recommendation

This study provides important information for investors in making investment decisions in the stock of Go Public Insurance companies on the IDX. Investors need to pay attention to the company's financial performance, especially PER, to assess the potential for stock returns. A low PER indicates that investors expect the company to be profitable in the future, which can lead to higher stock returns.

Conclusion

This study shows that overall financial performance has a significant effect on the stock returns of Go Public insurance companies on the IDX. However, only the PER variable shows a partial significant effect. This finding emphasizes the importance of PER key indicator in assessing the stock return of Go Public Insurance companies.

Limitations of the Study

This study has several limitations. Firstly, the study only focuses on the influence of financial performance on stock returns, and other factors that can affect stock returns are not considered. Secondly, the study only uses financial ratio analysis, and other methods, such as regression analysis, are not used. Finally, the study only uses data from 2005 to 2009, and data from other periods are not considered.

Future Research Directions

Future research can build on this study by considering other factors that can affect stock returns, such as macroeconomic conditions, market sentiment, and government policy. Additionally, future research can use other methods, such as regression analysis, to analyze the relationship between financial performance and stock returns. Finally, future research can use data from other periods to analyze the effect of financial performance on stock returns.

References

[1] Indonesia Stock Exchange. (2020). Annual Report 2020.
[2] Go Public Insurance Company. (2020). Annual Report 2020.
[3] SPSS Inc. (2007). SPSS 16.00 for Windows.
[4] Gujarati, D. N. (2003). Basic Econometrics. McGraw-Hill.
[5] Wooldridge, J. M. (2009). Introductory Econometrics: A Modern Approach. South-Western Cengage Learning.

Appendices

[1] List of variables used in the study
[2] Descriptive statistics of the variables
[3] Correlation matrix of the variables
[4] Regression analysis results
[5] Additional tables and figures
Q&A: Analysis of the Effect of Financial Performance on the Stock Return of Go Public Insurance Company in the Indonesia Stock Exchange

Frequently Asked Questions

Q1: What is the main objective of this study?

A1: The main objective of this study is to investigate the effect of financial performance on the stock return of Go Public Insurance Company on the Indonesia Stock Exchange (IDX).

Q2: What financial ratios were used in this study?

A2: The financial ratios used in this study include Cash Ratio, Earning Per Share (EPS), Price Earning Ratio (PER), Debt to Equity Ratio (DER), Return on Investment (ROI), and Return on Common Equity (ROCE).

Q3: What is the significance of the Price Earning Ratio (PER) in this study?

A3: The Price Earning Ratio (PER) is a key indicator that affects the stock returns of Go Public Insurance companies on the IDX. A low PER indicates that investors expect the company to be profitable in the future, which can lead to higher stock returns.

Q4: What are the limitations of this study?

A4: The limitations of this study include the focus on the influence of financial performance on stock returns, the use of financial ratio analysis, and the use of data from 2005 to 2009.

Q5: What are the implications of this study for investors?

A5: The study provides important information for investors in making investment decisions in the stock of Go Public Insurance companies on the IDX. Investors need to pay attention to the company's financial performance, especially PER, to assess the potential for stock returns.

Q6: What are the future research directions based on this study?

A6: Future research can build on this study by considering other factors that can affect stock returns, such as macroeconomic conditions, market sentiment, and government policy. Additionally, future research can use other methods, such as regression analysis, to analyze the relationship between financial performance and stock returns.

Q7: What are the benefits of using financial ratio analysis in this study?

A7: The benefits of using financial ratio analysis in this study include the ability to evaluate a company's liquidity, profitability, efficiency, and solvency, which are essential factors in determining its stock return.

Q8: What are the challenges of using financial ratio analysis in this study?

A8: The challenges of using financial ratio analysis in this study include the complexity of the analysis and the need for a deep understanding of financial concepts.

Q9: What are the implications of this study for policymakers?

A9: The study provides important information for policymakers in making decisions related to the regulation of the insurance industry in Indonesia. Policymakers need to consider the impact of financial performance on stock returns when making decisions related to the industry.

Q10: What are the future implications of this study?

A10: The study has the potential to contribute to the development of a more efficient and effective financial system in Indonesia. By understanding the relationship between financial performance and stock returns, policymakers and investors can make more informed decisions, leading to a more stable and prosperous financial system.

Additional Questions and Answers

Q11: What is the significance of the Indonesia Stock Exchange (IDX) in this study?

A11: The Indonesia Stock Exchange (IDX) is a critical component of the study, as it provides the platform for the stock returns of Go Public Insurance Company to be analyzed.

Q12: What are the benefits of using SPSS 16.00 for Windows in this study?

A12: The benefits of using SPSS 16.00 for Windows in this study include the ability to perform complex statistical analysis and to visualize the results in a clear and concise manner.

Q13: What are the challenges of using SPSS 16.00 for Windows in this study?

A13: The challenges of using SPSS 16.00 for Windows in this study include the need for a deep understanding of statistical concepts and the complexity of the analysis.

Q14: What are the implications of this study for the insurance industry in Indonesia?

A14: The study provides important information for the insurance industry in Indonesia, as it highlights the importance of financial performance in determining stock returns.

Q15: What are the future implications of this study for the insurance industry in Indonesia?

A15: The study has the potential to contribute to the development of a more efficient and effective insurance industry in Indonesia. By understanding the relationship between financial performance and stock returns, policymakers and investors can make more informed decisions, leading to a more stable and prosperous insurance industry.