Moderating Effect of Inflation Rate on the Relationship between Profitability and Asset Growth on Stock Return of 20 Most Active Stocks by Total Trading Value

Ika Pratiwi Simbolon; Stephen King

doi:10.32535/ijafap.v9i3.4621

Moderating Effect of Inflation Rate on the Relationship between Profitability and Asset Growth on Stock Return of 20 Most Active Stocks by Total Trading Value

Ika Pratiwi Simbolon, Stephen King

Abstract

This study examines the effect of profitability and asset growth on stock returns, with inflation as a moderating variable for the 20 most active stocks based on total trading value listed on the Indonesia Stock Exchange (IDX) during 2020–2024. The capital market plays an important role in economic development by facilitating investment and wealth creation, while stock returns remain a key consideration for investors in making investment decisions. Using a quantitative approach with multiple regression analysis, this study analyzes secondary data obtained from financial reports and market information. The results show that asset growth has a significant positive effect on stock returns, indicating that companies with higher asset expansion tend to generate higher investor returns. In contrast, return on assets and return on equity do not have a significant effect on stock returns. Furthermore, inflation is found to significantly moderate the relationship between asset growth and stock returns, suggesting that macroeconomic conditions strengthen the impact of firm growth on market performance. However, inflation does not moderate the relationship between profitability variables and stock returns. These findings highlight that asset growth is a more dominant factor than profitability in explaining stock returns in highly active stocks, while macroeconomic conditions play an important role in shaping investor responses to firm growth signals.

Keywords

Asset Growth; Inflation; Profitability; Stock Return; Capital Market

Full Text:

PDF

References

Acheampong, P., Agalega, E., & Shibu, A. K. (2014). The Effect of Financial Leverage and Market Size on Stock Returns on the Ghana Stock Exchange: Evidence from Selected Stocks in the Manufacturing Sector. International Journal of Financial Research, 5(1). https://doi.org/10.5430/ijfr.v5n1p125

Ahsan, A. F. M. M. (2012). Can ROE be used to Predict Portfolio Performance?. Economics, Management, and Financial Markets. 7(2), 132-148. https://www.researchgate.net/profile/Afm-Ahsan/publication/258341502_Can_Return_on_equity_be_used_to_predict_portfolio_performance/links/02e7e5350817a4cf52000000/Can-Return-on-equity-be-used-to-predict-portfolio-performance.pdf

Alfiyah, F. N., and Lubis, I. (2021). Effect of Return on Equity and Debt to Equity Ratio to Stock Return. Indonesian Financial Review, 1(1), 18-32. https://doi.org/10.55538/ifr.v1i1.3

Aurelia, L., & Setijaningsih, H. T. (2020). Analisis Pengaruh Struktur Aset, Pertumbuhan Aset, dan Ukuran Perusahaan Terhadap Struktur Modal. Jurnal Paradigma Akuntansi. 2(2), 801–807. https://doi.org/10.24912/jpa.v2i2.7662

Batchimeg, B. (2017). Financial performance determinants of organizations: The case of Mongolian companies. Journal of Competitiveness, 9(3), 22 – 33. DOI: 10.7441/joc.2017.03.02.

Budi, H. S. M. and Davianti, A. (2022). Firms’ Profitability and Stock Returns: Does it Always Affect Positively? International Journal of Social Science and Business. 6(1), 112-120. https://doi.org/10.23887/ijssb.v6i1.41927

Connelly, B. L., Certo, S. T., Ireland, R. D., & Reutzel, C. R. (2011). Signaling theory: A review and assessment. Journal of Management. 37(1), 39–67. https://doi.org/10.1177/01492063103884

Devita, H., and Arviana, N. (2023). Determinants of Financial Performance to Stock Return. International Journal of Educational Research & Social Sciences. 4(2). https://share.google/7Dt6MNyAXqrxb8dYZ

Fahnayu, M., Hariyanto, D., and Safitri, H. (2024). The Impact of Interest Rates, Exchange Rates and Inflation on Stock Returns on the LQ45 Index Listed on the Indonesian Stock Exchange. Journal Digmensie Management and Public Sector. 5(1), 13-20. https://doi.org/10.48173/jdmps.v5i1.255

Fajarini, Y., and Darmawan, A. (2024). The Effect of Macroeconomic Variables on Company Stock Prices with Inflation as a Moderating Variable on the Indonesian Mining Industry. PROFIT: Jurnal Administrasi Bisnis. 18(1). https://garuda.kemdiktisaintek.go.id/documents/detail/4218272

Firmansyah, A., Karyadi, E. A., & Setyaningtyas, H. S. (2020). Manajemen Laba, Pertumbuhan Aset, Return Saham Pada Perusahaan Subsektor Ritel Di Indonesia. Jurnal Akuntansi Universitas Jember. 18(2). https://share.google/WhP2bMCORszTjZtOC

Hakim, L., and Kusmanto (2020). Determinants of Stock Return and its Implications Divident Policy in Mining sector in Indonesia Stock Exchange. Utopía y Praxis Latinoamericana. 25(1). https://doi.org/:10.5281/zenodo.3774619

Hafidzi, A. H., and Qomariah, N. (2022). The Role of Return on Asset Mediation in Influencing Corporate Social Responsibility on Stock Returns in Manufacturing Companies. General Management. 23(186). https://doi.org/0.47750/QAS/23.186.30

Kurniawan, A. (2021). Analysis of the Effect of Return on Asset, Debt to Equity Ratio, and Total Asset Turnover on Share Return. Journal of Industrial Engineering & Management Research. 2(1). https://doi.org/10.7777/jiemar.v2i1.114

Kusumaningtyas, N., Widagdo, B., and Nurjannah, D. (2021). The Effect of Interest Rate, Inflation and Exchange Value on Stock Returns with Profitability as Intervening Variables. Jurnal Manajemen Bisnis dan Kewirausahaan. 1(2). https://doi.org/10.22219/jamanika.v1i2.16773

Lubis, et. al. (2024). Pasar Modal Dan Pengaruhnya Terhadap Perekonomian di Indonesia. Jurnal Akuntansi, Keuangan dan Auditing. 5(1), 196-214. https://doi.org/ 10.56696/jaka.v5i1.10755

Martalena, Iskandar and Hadianto, (2023). Inflation, exchange rate, and stock return: The evidence from the LQ45 index constituents in Indonesia. Owner: Riset & Jurnal Akuntansi. 7(4), 2949-2955. https://doi.org/10.33395/owner.v7i4.1859

Nahdhiyah, A. I., and Alliyah, S. (2023). The Effect of Profitability, Liquidity, Leverage, Company Size and Assets Growth on Stock Return: Empirical evidence from Indonesia. MAKSIMUM: Media Akuntansi Universitas Muhammadiyah Semarang. 13(1). https://doi.org/10.26714/MKI.13.1.2023.50-58.

Nadyayani, D. A. D., and Suarjaya, A. A. G. (2021). The Effect of Profitability on Stock Return. American Journal of Humanities and Social Sciences Research (AJHSSR). 5(1). https://share.google/bMRr2h0QWOKGyMZHr

Putra, F. L., Nurlaela, S., and Samrotun, Y. C. (2018). Effect of Return on Asset, Return on Equity, Debt to Equity Ratio to Return Stock Company Property and Real Estate in Indonesia Stock Exchange. The 2nd International Conference on Technology, Education, and Social Science. https://ejurnal.unisri.ac.id/index.php/proictss/article/view/2205

Putri, G. C. T., and Putri, E. (2023). The Influence of Return on Assets (ROA), Return on Equity (ROE), Debt to Asset Ratio (DAR), Debt to Equity Ratio (DER), Dividend Payout Ratio (DPR), and Net Profit Margin (NPM) on Stock Prices. The International Journal of Business Management and Technology. 7(1), 580-591. https://share.google/ZegmmarjrKWbL750O

Rahayu, W. W. H., & Riharjo, I. K. (2022). Pengaruh Rasio Keuangan terhadap Return saham. Jurnal Ilmu dan Riset Akuntansi. 11(8), 1–20. https://jurnalmahasiswa.stiesia.ac.id/index.php/jira/article/view/4751

Rahmawati, W., Ulya, N, and Karim, A. (2023). Effect of Return on Assets, Return on Equity, and Current Ratio on Stock Returns. Economics & Business Solutions Journal. 7(2). https://doi.org/10.26623/ebsj.v7i2.7383

Rasyad, R., Z., Iskandar, R., and Azis, M. (2020). Determinant of Stock Returns with Inflation as a Moderating Variable. Saudi Journal of Business and Management Studies. 5(6). https://doi.org/10.36348/sjbms.2020.v05i06.006

Reddy, D. V. L. (2012). Impact of Inflation and GDP on Stock Market Returns in India. International Journal of Advanced Research in Management and Social Sciences. 1(6). https://share.google/ivvTDReOHcaqpdJ3k

Sailendra, and Suratno. (2014). Fundamental Factors, Conditions Macroeconomic and Stock ReturnMining companies in Indonesia Stock Exchange. Journal of Research in Accounting and Taxation. 1(1). https://doi.org/10.35838/JRAP.2014.001.01.1

Saputra, I., Veny, & Mayangsari, S. (2018). Pengaruh Rasio Keuangan, Aksi Korporasi dan Faktor Fundamental Ekonomi Makro terhadap Harga Saham. Jurnal Magister Akuntansi Trisakti. 5(1), 89-114. https://doi.org/10.25105/jmat.v5i1.5078

Satoto, E. B. (2023). The Effect of Fuel Price Fluctuations, Exchange Rates, and Profitability on Stock Returns and Inflation as Intervening Variables. Jurnal Ilmiah Manajemen dan Bisnis. 8(1). https://doi.org/10.38043/jimb.v8i1.4460

Simbolon, I. P., Panjaitan, R., and Angelia, N. (2024). The Effect of Narrow Money (M1), Broad Money (M2) and Exchange Rate on Profitability of KBMI 1 and 2 Banks. Sultanist: Jurnal Manajemen dan Keuangan. 12(1). https://doi.org/10.37403/sultanist.v12i1.571

Veny. (2019). Pengaruh Informasi Keuangan dan Aksi Korporasi terhadap Harga Saham Perusahaan Industri Dasar dan Kimia tahun 2015-2017. Jurnal Akuntansi Bisnis. 12(2), 172-187. http://dx.doi.org/10.30813/jab.v12i2.1777

Wijaya, D. P., and Sedana, I. B. P. (2020). Effects of Quick Ratio, Return on Assets and Exchange Rates on Stock Returns. American Journal of Humanities and Social Sciences Research. 4(1). https://share.google/U98R9Huh4JgfUnNKV

Yulianto and Mayasari, K. I. (2022). The Influence of Sales Growth and Asset Growth on Stock Return. International Journal of Social And Management Studies. 3(3). https://doi.org/10.5555/ijosmas.v3i3.204

DOI: https://doi.org/10.32535/ijafap.v9i3.4621