PUBLIC ATTENTION AND FINANCIAL INFORMATION AS DETERMINANTS OF FIRMS PERFORMANCE IN THE TELECOMMUNICATION SECTOR
Abstract
The remarkable progress of information technology had driven every firm to publish their financial performance by using internet. This circumstance resulted in the high public attention in order to generate the stock return. In addition, financial information such as financial ratio namely DER, LEV, NPM, ROI, and ROE were supposed to influence the firm’s performance either in positive or negative effects. This study focused on the investigation of public attention (PA) and financial information as determinants of financial performance on four companies in Telecommunication sector, Indonesia Stock Exchange (IDX), within time period from 2007 to 2012. Hereby, we pointed out that public attention and financial information considerably contribute to firm performance, in which the Pooled Least Square (EGLS) with cross section and period weight was employed. The results showed that Public Attention (PA) positively contributed towards stock return. Further, financial ratio such as debt-to-equity ratio (DER) negatively influenced the return. Leverage (LEV), net profit margin (NPM) and return on investment (ROI) positively related to return. However, return on equity (ROE) showed the contrary sign, in which it negatively influenced the return but was statistically insignificant. Then, we reported that the stock price (LNSP) did not significantly contribute towards return (RET).
Keywords
Full Text:
pdfReferences
Baltagi, B.H. 2005. Econometric Analysis of Panel Data. Third Edtition. Chichester: John Wiley & Sons.
Bank, M. & Peter, G. 2009. Public Attention, Adverse Selection, and the Pricing of Stocks. Working Paper. University Innsbruck.
Bank, M., Larch, M., & Peter, G. 2011. Google Search Volume and its Influence on Liquidity and Returns of German Stocks. Financial Market Portofolio Management, 10(25): 239-264.
Brigham, F.E. & Ehrhardt, C.M. 2005. Financial Management, Theory, and Practice. New York: Mac Graw-Hill/Irwin.
Brown, S.J., Goetzmann, W.N., & Kumar, A. 1998. The Dow Theory: William Peter Hamilton’s Track Record Recensidered. The Journal of Finance, 53(4): 1311-1333.
Cohen, K.J., Ness, W.L., Okuda, H., Schwartz R.A., & Whitcomb, D.K. 1976. The Determinant of Common Stock Returns Volatility: An International Comparison. The Jurnal of Finance, 32(2): 733-740.
Da, Z., Engelberg, J., & Gao, P. 2011. In Search of Attention. Journal of Finance, 66(5):1461-1499.
Fang, L.H. & Peress, J. 2009. Media Coverage and the Cross Section of Stock Returns and Bonds. Journal of Financial Economic, 64(5): 2113-2127.
Fink, C. & Johann, T. 2013. May I Have Your Attention, Please: The Market Microstructure of Investor Atttention. Working Paper. University of Mannheim.
Gujarati, N.D. 1995. Basic Econometrics. Third Edition. New York: MacGraw-Hill.
Johnson, J.L., Ellstrand, A.E., Dalton, D.R., & Dalton, C.M. 2005. The Influence of the Financial Press on Stockholder Wealth: The Case of Corporate Governance. Strategic Management Journal, 26(1): 461-471.
Kaniel, R., Saar, G., & Titman, S. 2008. Individual Investor Trading and Stock Return. Journal of Finance, 63(1): 273-310.
Kheradyar, S., Ibrahim, I., & Nor, F.M. 2011. Stock Return Predictability with Financial Ratios. International Jurnal of Trade, Economics and Finance, 2(5): 1-6.
Lewellen, J. 2000. Predicting Returns with Financial Ratios. Journal of Financial Economics, 7(1): 209-235.
Liu, S. 2005. Debt/equity Ratio and Expected Rate of Return on Equity: Empirical Evidence from the Property Investment Companies in the UK. Thesis in Master of Science. Bartlett School of Graduate Studies. University College London.
Martani, D., Mulyono, & Khairurizka, R. 2009. The Effect of Financial Ratios, Firm Size, and Cash Flow from Operating Activities in the Interim Report to the Stock Return. Chinese Business Review, 8(6): 44-55.
Modigliani, F. & Miller, M.H. 1958. The Cost of Capital, Corporation Finance, and the Theory of Investment. The American Economic Review, 48(3): 261-297.
Neuman, W.R. 1990. The Treshold of Public Attention. Public Opinion Quarterly, 54(2): 159-176.
Pouraghajan, A., Mansourinia, E., Bagheri, S.M.B., Emamgholipour, M., & Emamgholipour, B. 2013. Investigation the Effect of Financial Ratios, Operating Cash Flows and Firm Size on Earning Per Share: Evidence from the Tehran Stock Exchange. International Research Journal of Applied and Basic Sciences, 4(5): 1026-1033.
Tandelilin, E. 1997. Determinants of Systematic Risk: The Experience of Some Indonesian Common Stock. Kelola, 6(16): 101-115.
Tandelilin, E. 2010. Portofolio dan Investasi “Teori dan Aplikasinya”. Yogyakarta: Kanisius.
Usman, B. & Tandelilin, E. 2013. Google Search Traffic And It’s Influence on Return, Liquidity, and Volatility of Stock Return: Manufacturing Firms in Indonesia Stock Exhange. The 10th International Annual Symposium Management. Bali.
Walid, E.M. 2009. New Evidence on Risk Factor, Characteristic, and the Cross-Sectional Variation on Japanese Stock. Asia-Pacific Financial Markets, 16(1): 33-50.
DOI: https://doi.org/10.26905/jkdp.v19i2.846
Refbacks
- There are currently no refbacks.
Jurnal Keuangan dan Perbankan (Journal of Finance and Banking)
Diploma Program of Banking and Finance, Faculty of Economics and Business, University of Merdeka Malang
Published by University of Merdeka Malang
Mailing Address:
2nd floor Finance and Banking Building, Jl. Terusan Raya Dieng No. 57 Malang, East Java, Indonesia
Phone: +62 81 2332-1664
Email: jkp@unmer.ac.id
This work is licensed under a Creative
Commons Attribution-ShareAlike 4.0