COMPANY VALUE IN ONE OF THE NATIONAL PRIVATE BANKS IN INDONESIA PERIOD 2012 TO 2019
Ana Sulistiana1, Tri Ningsih2
Sekolah Tinggi Ilmu Ekonomi, Pasundan, Bandung, Indonesia1,2 anasulitiana@gmail.com1, tri@stiepas.ac.id2
Abstract
This study aimed to determine and analyze the influence of company growth and profitability on company value at one of the well-known national private banks in Indonesia for the 2012-2019 period. In this study, data collection techniques were used to obtain research data in the form of secondary data obtained from financial report documentation. There are two types of data used in this study: qualitative data in the form of a general description of the company and quantitative data in the form of the company's financial statements consisting of a profit and loss balance. Then the data were analyzed according to research needs: company growth proxied by Assets Growth, Profitability proxied by ROA, and company value proxied by PBV. The results showed that company growth (Asset Growth) positively and significantly affected firm value (PBV). In addition, profitability (ROA) positively and significantly affects firm value (PBV). As a result, company growth (Asset Growth) and profitability (ROA) simultaneously have a positive and significant effect on firm value (PBV) at one of the national private banks in Indonesia for the 2012- 2019 period. The implications of research on companies need to increase company growth and profitability on firm value. Companies must increase the company's total assets and high return on assets. From an investor's point of view, a company with good growth will produce a reasonable rate of return—the higher the company's ability to earn profits, the greater the return expected by investors.
Keywords : company growth, profitability, company value.
Abstrak
Tujuan penelitian ini adalah untuk mengetahui dan menganalisis besarnya pengaruh Pertumbuhan Perusahaan dan Profitabilitas Terhadap Nilai Perusahan pada salah satu bank swasta nasional yang terkenal di Indonesia periode 2012-2019. Dalam penelitian ini teknik pengumpulan data yang digunakan untuk mendapatkan data penelitian berupa data sekunder yang diperoleh dari dokumentasi laporan keuangan.
Terdapat dua jenis data yang digunakan dalam penelitian ini yaitu data kualitatif yang berupa gambaran umum perusahaan serta data kuantitatif yang berupa laporan keuangan perusahaan yang terdiri dari neraca laba rugi. Kemudian data tersebut dianalisis sesuai dengan kebutuhan penelitian, yaitu pertumbuhan perusahaan yang diproksikan dengan Assets Growth, Profitabilitas yang diproksikan dengan ROA dan nilai perusahaan yang diproksikan dengan PBV. Hasil penelitian menunjukkan pertumbuhan perusahaan (Asset Growth) berpengaruh positif dan signifikan terhadap nilai perusahaan (PBV). Profitabilitas (ROA) juga berpengaruh positif dan signifikan terhadap nilai perusahaan (PBV). Pertumbuhan perusahaan (Asset Growth) dan profitabilitas (ROA) secara simultan berpengaruh positif dan signifikan terhadap nilai perusahaan (PBV) pada salah satu bank swasta nasional yang ada Indonesia periode 2012-2019. Implikasi penelian perusahaan perlu meningkatkan pertumbuhan perusahaan dan profitabilitas terhadap nilai perusahaan, perusahaan dituntut untuk meningkatkan total asset perusahaan dan return on asset yang tinggi.
Menurut sudut pandang investor, perusahaan yang memiliki pertumbuhan yang baik akan menghasilkan tingkat pengembalian (rate of return) yang baik. Semakin tinggi kemamapuan perusahaan untuk memperoleh laba, maka semakin besar return yang diharapkan oleh para investor.
Kata kunci : pertumbuhan perusahaan, profitabilitas, nilai perusahaan.
INTRODUCTION
One of the essential goals of establishing a company is to increase the welfare of its owners or shareholders or to maximize shareholder
wealth by increasing the company's value. If the company has grown large, the need for capital to run the company will increase. In this case, the company can use internal and external sources.
(Sidharta & Affandi, 2016) If internal sources are insufficient, the company has no choice but to use external capital, such as taking on debt, issuing bonds, or listing company shares on the capital market to meet the company's funding needs. The capital market is a market for sharing long-term financial instruments that can be traded, both bonds, equities or stocks, mutual funds, derivative instruments, and other instruments. The capital market is a means of funding for companies and other institutions (e.g., the government) and as a means for investing activities. (Effendi, Affandi &
Sidharta, 2016)
One of Indonesia's leading national private banks is committed to integrity, persistence in prioritizing customers, and the passion for continuing to excel. It will continue utilizing its strengths to create synergies between units. The main goal of companies that have gone public is to increase the prosperity of owners or shareholders by increasing the company's value.
(Husain & Sunardi, 2020) The firm value acts as an investor's perception of a company's success level, which is closely related to its share price.
High stock prices make the company value also high and increase market confidence not only in the company's current performance but also in the company's prospects in the future. (Wahjudi, 2020) Company value can be seen from the stock price and measured using the valuation ratio. The valuation ratio provides information on how much a company is worth in the eyes of the public, so investors/public are interested in buying shares at a higher price than their book value. According to Brigham & Houston (2021),
the ratio for assessing company value is the Price to Book Value (PBV) ratio.
Based on preliminary observations, researchers can indicate that the Company Value proxied through PBV (Price to Book Value) at one of Indonesia's well-known national private banks decreased during the 2012-2019 period. In the 2012-2019 period, there was a decrease in the company's value from year to year. This condition is because the stock price continues to decline. This condition can reduce investors' interest in buying company shares because the value of shares and low PBV can be caused by a decrease in equity which is very likely an indication that the company continues to lose money. When a company loses money, there will be no investors interested in investing their shares in the company. The decline in the company's value is the main problem in this study because when the company's value decreases, this will affect investor confidence that the company's performance is not good and is less prospective in the present and future. This condition is also a consideration for investors to invest their capital. In this condition, investors tend only to invest if the company's value increases.
To anticipate the problem of declining company value, we need to know what factors can affect company value. In general, the company's value is influenced by internal and external factors, including company performance, financial management, capital structure, costs, investment decisions, and others. While external factors in the form of interest rates, inflation, exchange rates, and so forth.
In addition to those already mentioned, the company's growth is also one of the factors that affect the value of the company. The company growth indicator used in this research is asset growth, by the opinion of Brigham & Daves (2018), which states that asset growth is an indicator used in determining company growth.
Asset growth is calculated as the percentage change in assets at a specific time compared to the previous year. This condition is essential because, with this calculation, the company's management can determine the development of the company's assets and as a reference in making decisions. Companies that continue to grow will generally have good prospects. This condition will undoubtedly be responded to positively by investors so that it will have an impact on rising stock prices. When the stock price rises, the value of the company will increase. Moreover, after the company's value increases, investors will give a positive response to invest their capital.
In addition to company growth, company profitability can also affect company value.
Return on Assets (ROA) describes how the company's assets can generate profits. ROA can also measure a company's ability to generate profits in the past project in the future. In this study, the authors used the ROA indicator because they wanted to know the company's ability to earn profits by using the total assets owned so that shareholders get information about its effectiveness in managing the company.
Moreover, this is proven by previous research by Husna & Satria (2019) and George & Agwili (2020), which stated that profitability positively affects company value.
Company profitability is a reasonably necessary variable because, through profitability, a decision will be made whether the company's profits are distributed as dividends or retained for cash ownership or to make investments in the hope that the company will gain profits in the future.
The high profitability shows the effectiveness of the company's management. High profitability can also show good prospects for investors because investors will be attracted to companies that have good profitability, causing an increase in demand for shares. The increased demand for shares will lead to an increase in the value of the company as well.
Based on empirical data on firm value, company growth, and Profitability, there appears to be an inconsistency in the relationship between the independent variables. Namely, the Company's Growth is proxied by Asset Growth, and Profitability is proxied by Return on Assets (ROA) with the dependent variable. The variable, namely company value proxied by Price to Book Value (PBV), is interesting for further research. Therefore, in this study, the authors can formulate the problem of how significant the influence of company growth and Profitability is on company value at one of the well-known national private banks in Indonesia for the 2012- 2019 period.
The purpose of this study was to find out and analyze: The magnitude of the influence of Company Growth and Profitability on Company Value at one of the well-known national private banks in Indonesia for the 2012-2019 period.
METHOD
This study uses data collection techniques to get research data in the form of secondary data obtained from financial report documentation.
There are two types of data used in this study:
qualitative data in the form of a general description of the company and quantitative data in the form of the company's financial statements consisting of a profit and loss balance. Then the data were analyzed according to research needs:
company growth proxied by Assets Growth, Profitability proxied by ROA, and company value proxied by PBV.
The research sample is part of the number and characteristics possessed by the population. This study's population is one of Indonesia's national private banks. The sample selection in this study uses financial reports that are presented quarterly for a period of 8 consecutive years, from 2012- 2019. Data processing in this study uses a multiple linear regression model, so all data must be tested by testing the classical assumptions first. This test aims to produce a good regression model. To avoid errors in testing the classical assumptions, the number of samples used must be free from bias (Best Linear Unbiased Estimator/BLUE).
Data analysis technique using Multiple Linear Regression Analysis is a study of the dependence of the dependent variable with one or more independent variables, aiming to estimate or predict the population average or the average value of the independent variables based on known values of the dependent variable.
The statistical analysis used in this study is multiple linear regression analysis using the SPSS program. Multiple linear regression
analysis calculates the quantitative influence of a change in events (variable X) on other events (variable Y).
Multiple regression analysis in this study is used to determine the effect of company growth and profitability on firm value at one of the national private banks for the 2012-2019 period.
Moreover, the coefficient of determination (R2) is used to determine the percentage of total independent influence on the dependent variable.
The coefficient of determination (R2) is intended to measure the ability of the independent variable percentage in the multiple regression model to explain the dependent variable. The coefficient of determination is between 0 and 1. The small value of R2 means that the ability of the independent variables to explain the variation in the dependent variable is minimal. A value close to 1 means that the independent variable provides almost all the information needed to predict the dependent variable.
RESULTS AND DISCUSSION
Based on the results of descriptive statistical analysis, the characteristics of the sample used in this study include the number of samples (N), sample average (mean), maximum value, minimum value, and standard deviation, indicating that the number of data observations at one of the national private banks in Indonesia is from the 1st quarter to the 4th quarter of 2012 to 2019. Thus in this study, the amount of data used is 32 data.
Descriptive analysis is used to see an overview of the data. In this study, the data we will describe are Asset Growth, Profitability (ROA), and Firm
Value (PBV) data at one of the national private banks in Indonesia for the 2012-2019 period.
Based on the data obtained, the Asset Growth value at one of the national private banks in Indonesia for the 2012-2019 period experienced fluctuating conditions. However, at the end of 2019 or the fourth quarter of 2019, conditions returned to their original position or remained constant. From the table, during the period studied, the value of Asset Growth reached its highest value in the first quarter of 2013 at 10%.
One of the national private banks in Indonesia recorded total assets of IDR 217.46 trillion as of March 31, 2013, or the first quarter of 2013, growing 13% from the same position in 2012 of IDR 129.83 trillion. This condition was due to an increase in consolidated net profit (unaudited) of Rp.1.05 trillion as of March 31, 2013, or an increase of 12% compared to the same period in 2012 of Rp.937 billion and an increase in total third-party funds (DPK), which grew 26% to Rp.167.32 trillion, compared to the previous year's results. In addition, the lowest value was recorded in the second quarter of 2013 of -7%, which was caused by a decrease in DPK of Rp.
149.94 trillion, also due to an increase in interest rates and inflationary pressure due to an increase in fuel prices. The mean or average Asset Growth is 1.63% with a standard deviation which we can see at 4.5 of 3.5%. This condition indicates that the variable data could be better because the standard deviation is greater than the mean. This condition is a problem because this will cause targets that are different from what is expected by the company to maximize the value of the company by increasing the company's growth.
Based on the data, the ROA value at one of the national private banks in Indonesia for the 2012- 2019 period experienced fluctuating conditions.
That during the period studied, the value of ROA reached its highest value in the third quarter of 2012 with a percentage of 0.59%. This condition happened because the ratio of non-performing loans or gross NPL as of September 30, 2012, was recorded at 2.41%, lower than the same position in the previous year at 2.63%. On the other hand, the lowest value was recorded in the fourth quarter of 2014 with a percentage of 0.02% because the Gross NPL on December 31, 2014, experienced a relatively high increase to 3.90%. The mean or average ROA during 2012- 2019 was 0.32%, with a standard deviation of 0.17%. These results indicate that the variable data could be better because the standard deviation is greater than the mean.
From the results of multiple linear regression calculations it can be explained as follows:
- The constant value in the multiple linear regression equation of 39,439 shows the mathematical value of Firm Value (PBV) in conditions where Company Growth (Growth) and Profitability (ROA) are zero,
- The regression coefficient of Company Growth (Growth) is 2,290, which means that if the Company's Growth (Growth) increases by 1%, then the Firm Value (PBV) will increase by 2.290%, assuming that other variables are considered constant (ceterus paribus),
- Profitability regression coefficient (ROA) is 123,379, which means if Profitability (ROA) increases by 1%, then Firm Value (PBV) will increase by 123.379%, assuming that other
variables are considered constant (ceterus paribus).
The calculation of the coefficient of determination test (R2) results obtained an R- Square value of 0.612 or 61.2%. This condition means that company growth (asset growth) and profitability (ROA) have an influence of 61.2%
on firm value (PBV), while the remaining 38.8%
is influenced by other variables not examined.
Based on the regression transformation analysis results, the independent variable, namely Assets Growth, has a positive and significant effect on the dependent variable, namely Firm Value (PBV), with a significance level of 0.000 <0.05.
At the same time, the independent variable, Profitability (ROA), has a positive and significant effect on the dependent variable, namely Firm Value (PBV), with a significance level of 0.000 <0.05. Therefore, from the regression transformation analysis results, the calculated F value is 22.883 with a probability value (significance) = 0.000.
Company growth is a ratio that reflects the company's ability to maintain its economic position amid economic growth and its business sector. The company's growth uses Asset Growth as a measuring tool in this study.
The calculations through SPSS show that the highest Asset Growth value occurred in the first quarter of 2013 at 10%. This condition was none other than the result of the company's performance which increased the company's profit by 12% compared to the previous year's period. Meanwhile, the lowest ROE value was recorded in the second quarter of 2013 at -7%.
This condition was due to increased interest rates
and inflation due to the government's policy to increase fuel prices.
This decrease will affect the company's value because if its growth is not good, it will reduce its value in the public eye. However, based on the company's previous financial performance history, in the future, the company is expected to be able to maintain and increase consistency in earning profits and asset quality.
Profitability is a company's ability to earn profits when its operations are closely related to sales, total assets, and own capital. In this study, profitability uses Return on Assets (ROA) as a measuring tool. The calculations using SPSS show that the highest value of ROA occurred in the third quarter of 2012 at 0.59%. This condition happened because one of the factors that increased ROA, namely the ratio of non- performing loans or gross NPLs as of September 30, 2012, was recorded at 2.41%, lower than the same position in the previous year at the level of 2.63%. Meanwhile, the lowest ROA value was recorded in the fourth quarter of 2014 at 0.02%.
This condition is due to the relatively high increase in NPL of 3.90%. This condition affects the level of profit that the company will obtain.
The greater the net profit received by the company, the better the company's performance.
Therefore, this condition will affect the company's value in the eyes of investors and the public.
The company value describes how management manages the company's assets which can be seen from the measurement of financial performance.
This study measures company value using Price to Book Value (PBV). For companies that are running well, the PBV ratio generally reaches a
value above 1, which indicates that the company's value is higher than the book value.
The higher the value of the PBV ratio, the higher the company is valued by investors relative to the funds invested in the company, and the higher the level of market confidence in the future.
The calculations using SPSS show that the highest PBV value occurred in the first quarter of 2012 at 161%, and the lowest value was recorded in the second quarter of 2016 at 40%. This condition will affect the company's value because the higher the value of the company (PBV), the higher the company in the eyes of investors. Therefore, company management must be able and able to manage the company's financial performance properly so that the community and investors have high value for the company.
The test results from the data analysis that has been carried out show that the company growth variable (Asset Growth) has a positive and significant effect on firm value (PBV). This condition is based on the calculation results of the following multiple regression analysis:
Y = 39,439 + 2,290X1 + 123,379X2
The coefficient contained in the above equation is 39.439. This condition indicates that if there is no value for company growth and profitability, then the value of PT is. For example, Bank CIMB Niaga Tbk for the 2012-2019 period amounted to 39,439. At the same time, the company's growth has a coefficient of 2.290, which means that every increase of 1 unit is predicted to increase the company's value by 2.290 units.
From the results of the partial test (t-test), it was found that the company's growth (Asset Growth) partially had a significant influence on the
company's value (PBV) Tbk for the 2012-2019 period. This condition shows that the t statistic value on the company's growth variable is 0.043.
These results indicate that the sig value is smaller than the probability value of 0.05 or a value of 0.000 <0.05, which means that there is a positive and significant influence of company growth on firm value. In addition, the results of previous research conducted by Ocak & Fındık (2019) and Sondakh (2019) show that company growth (Asset Growth) has a positive and significant effect on firm value (PBV).
The results of previous research conducted by Suwardika & Mustanda (2017) and Kurniawan &
Mawardi (2017) show that company growth (Asset Growth) and profitability (ROA) have a positive and significant effect on firm value (PBV).
CONCLUSION
The results showed that company growth (Asset Growth) positively and significantly affects firm value (PBV). This indicates that increasing profits and improving asset quality affect company value in society. The better the growth of the company, the better the investor's trust in the company. Profitability (ROA) also has a positive and significant effect on firm value (PBV). The results of this study indicate that a high rate of return on assets helps management to be able to manage the company, make decisions and plan better future steps. Good company performance will undoubtedly increase the trust and value of the company in society and investors. Company growth (Asset Growth) and profitability (ROA) simultaneously have a positive and significant effect on firm value
(PBV) at one of the national private banks in Indonesia for the 2012-2019 period. This study shows that when the company's growth value (Asset Growth) and profitability (ROA) increase, it will increase the company's value (PBV).
To increase the effect of company growth on firm value, companies need to increase their assets to provide positive Asset Growth results so that company value will increase. As for concrete steps to increase the effect of profitability on firm value, the company must be able to increase Return on Assets to attract a positive response from investors, which directly increases firm value. To increase the influence of company growth and profitability on firm value, companies must increase total company assets and high return on assets. From an investor's point of view, a company with good growth will produce a reasonable rate of return. The higher the company's ability to earn profits, the greater the return expected by investors. Therefore, companies with high corporate growth and profitability shares will be in demand by investors. High interest from the public and investors will increase the company's value.
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https://doi.org/10.1108/JMD-07-2018-0211
