The Effect of Financial Performance on Company Value Banks Registered at Indonesia Stock Exchange:2014-2016

Abstract

This study aims to find empirical evidence of the effect of financial performance both partially and simultaneously, as measured by Return On Assets (ROA) and Return On Equity (ROE) on Firm Value. (An empirical study of banking companies listed on the Indonesia Stock Exchange). The sampling method used was purposive sampling method and obtained 16 sample companies that became the object of research. The technical analysis used in this study is multiple linear regression analysis using SPSS version 22. Data was tested using the coefficient of determination test, F test and t test at a significance level of 5%. In addition, there is also a classic assumption test consisting of normality test, multicollinearity test, heteroscedasticity test and autocorrelation test. The independent variable used in this study is the financial performance reviewed from Return On Assets (ROA) and Return On Equity (ROE), while the Corporate Value as the dependent variable. The test results show that simultaneously, all independent variables in this study have a significant effect on firm value. Partially Return On Assets (ROA) and Return On Equity (ROE) have a positive and significant effect on firm value.

Keywords: Return On Assets (ROA), Return On Equity (ROE), and company value