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Journal : Jurnal Manajemen Universitas Bung Hatta

Moderating Effects of Market Based Value on the Relationship Between Financial Performance and Stock Returns: Evidence from the Indonesian Banking Industry Ciseta Yoda, Tilawatil; Husni, Tafdil; Luthan, Elvira; Rahim, Rida
JURNAL MANAJEMEN UNIVERSITAS BUNG HATTA Vol 20 No 1 (2025): Jurnal Manajemen Universitas Bung Hatta
Publisher : Management Department, Faculty of Economics and Business, Universitas Bung Hatta

Show Abstract | Download Original | Original Source | Check in Google Scholar | DOI: 10.37301/jmubh.v20i1.26951

Abstract

The information that investors receive plays a crucial role in shaping their expectations regarding a firm's future prospects. It serves as a signal of the firm's performance, further amplified by its total market capitalization. This study delves into the relationship between financial performance and stock returns, with market capitalization acting as a moderating variable. Drawing on panel data from banking companies listed on the Indonesia Stock Exchange (IDX) between 2013 and 2022, the research encompasses 363 firm-year observations. Using an Ordinary Least Squares (OLS) estimation model, the findings reveal that market capitalization exerts a positive and significant influence on the relationship between financial performance and stock returns. This suggests that firms with higher market capitalization tend to see a stronger alignment between their financial performance and investor returns, underscoring the value of size and market perception in driving stock price movements.