Effect of Financial Performance on the Return on Shares of Banks on the Indonesian Stock Exchange in 2012-2016

Abstract

This research aims at identifying as to whether or not financial ratios have any effect on the return on shares. The samples used in this research are companies engaging in the financial sector which had gone public and had been listed on the Indonesian Stock Exchange (IDX) for three years, namely in the period of 2012-2016. The data analysis techniques used are multiple linear regression and hypothetical test using t-statistic for testing the partial regression coefficient as well as F-statistic for testing the significance of effects simultaneously or concurrently with a significance level of 5%. The results of this research indicate that the financial ratios, which consist of CAR, NPL, ROA, ROE, BOPO, NIM and LDR, have simultaneous effect on the return on shares, and the CAR, NPL, NIM and LDR ratios partially affect the return on shares, while the most dominant ratio affecting the return on shares is CAR. Keywords—Financial Performances, Financial Ratios, and Return on Shares