Assets Efficiency and Stock Returns: Descriptive Analysis

Abstract

Economic growth can be pursued through company performance. However, few companies present negative equity. In Indonesia, some firms with negative equity have positive net income and stock returns. This study compares the performance of negative (and positive) equity in the Indonesia Stock Exchange. The observation was conducted from 2019, in marked negative equity notation and two previous periods. It involved all the market negative equity notation companies. We found no significant difference between companies with negative equity and those with positive equity on the asset's efficiency using comparative analysis. The difference relied on the capability of managing the expenses, including interest expenses. Leverage has a positive and significant correlation to assets utilization in companies with negative equity only, while it is insignificant in companies with positive equity. The investors consider the stock companies with negative equity even though the obtained stock returns are not different whether they invested either in the companies with positive or negative equity.

Citation

Fachrudin, K.A. and Fachrudin, (2022), "Assets Efficiency and Stock Returns: Descriptive Analysis", Sergi, B.S. and Sulistiawan, D. (Ed.) Modeling Economic Growth in Contemporary Indonesia (Entrepreneurship and Global Economic Growth), Emerald Publishing Limited, Leeds, pp. 95-106. https://doi.org/10.1108/978-1-80262-431-120221007