THE EFFECTS OF FOREIGN DIRECT INVESTMENT AND PROFITABILITY ON THE STOCK RETURNS

(1)

VOLUME 21 ISSUE 2 JUNE 2023 JURNAL APLIKASI MANAJEMEN

418

JAM

J u r n a l A p l i k a s i M a n a j e m e n J o u r n a l o f A p p l i e d M a n a g e m e n t

V o l u m e 2 1 I s s u e 2 J u n e 2 0 2 3

2 1 | 2 | 2 0 2 3

R e c e i v e d F e b r u a r y ‘ 2 3

R e v i s e d A p r i l ‘ 2 3

M a y ‘ 2 3

A c c e p t e d M a y ‘ 2 3

THE EFFECTS OF FOREIGN DIRECT INVESTMENT AND PROFITABILITY ON THE

STOCK RETURNS

Vierkury Metyopandi

Master of Management, Faculty of Economics and Business, University of Brawijaya, Indonesia

Ubud Salim Siti Aisjah

Faculty of Economics and Business, Universitas Brawijaya, Indonesia

Abstract: This research aimed to identify how to examine and analyze the effects of foreign direct investment and profitability on the stock returns in manufacturing companies registered on IDX during 2016 – 2018. The total population was 91 companies registered and filtered into 32 registered companies according to the sample criteria and analyzed through Eviews 10 soft- ware. The research result referred that the foreign direct investment received by multinational companies could not yet affect stock return directly. Also, foreign direct investment was not able to influence the return on asset (ROA), but it was able to affect the return on equity (ROE). Further, ROA was not able to affect the increase of stock returns, while ROE was able to affect the rise of stock returns. Another research finding showed that ROE was the only one that could be a mediation variable in the relationship between foreign direct investment affecting stock returns. At the same time, ROA could not be a mediation variable. For the next studies, the researchers suggested exploring the other financial performance variables suited to foreign direct investment to affect the stock returns. In practice implication from this research, the investors must see how strong the capital owned by a company that accepts foreign direct investment and the relation, how the capital they receive can improve or maintain the company's financial performance within a certain period of time.

Keywords: Foreign Direct Investment (FDI), Foreign Ownership, Profitabil- ity, Return on Asset (ROA), Return on Equity (ROE), and Stock Return

CITATION

Metyopandi, V., Salim, U., and Aisjah, S. 2023. The Effects of Foreign Direct Investment and Prof- itability on the Stock Returns. Jurnal Aplikasi Manajemen, Volume 21, Issue 2, Pages 418–426.

Malang: Universitas Brawijaya. DOI: http://dx.doi.org/10.21776/ub.jam.2023.021.02.11.

I N D E X E D I N

D O A J - D i r e c t o r y o f O p e n A c c e s s J o u r n a l s

A C I - A S E A N C i t a t i o n I n d e x S I N T A - S c i e n c e a n d T e c h n o l o g y I n d e x

D i m e n s i o n s G o o g l e S c h o l a r R e s e a c h G a t e G a r u d a

I P I - I n d o n e s i a n P u b l i c a t i o n I n d e x

I n d o n e s i a n O N E S e a r c h

C O R R E S P O ND I N G A U T H O R

V i e r k u r y M e t y o p a n d i F a c u l t y o f E c o n o m i c s a n d B u s i - n e s s ,

U n i v e r s i t y o f B r a w i j a y a , I n d o n e s i a

E M A I L

[email protected]

OPEN ACCESS

e I S S N 2 3 0 2 - 6 3 3 2 p I S S N 1 6 9 3 - 5 2 4 1

(2)

VOLUME 21 ISSUE 2 JUNE 2023

METYOPANDI ET AL. (2023) JURNAL APLIKASI MANAJEMEN

419

INTRODUCTION

Indonesia is a developing country regarded as one of the investment-objective countries. Lo- cal or foreign investors can strengthen their investment business by getting involved in the listed or public companies in Indonesia. Each multinational and domestic company will issue shares in a local exchange where the company is operating. Altho- ugh, the multinational company can also seek funds from foreign investors by issuing shares on a stock exchange (Madura, 2015). This factor will raise competitive action in the Indonesian stock exchange, consisting of multinational and domestic companies.

The good capital market will get the effect of foreign portfolio flows from the demand side.

The capital market will provide a set of assets with various risks, returns, and liquidity. This condition upgrades the asset choice and encourages the capital market to be more excited since it has provided high liquidity for the depositor and capitalist and increased savings. The government promotes the development of the capital market in Indonesia, so the number of companies that aim to be involved in the Indonesian capital market keeps increasing.

It has been recorded approximately 625 companies in the Indonesia are involved in the Indonesian stock exchange (IDX, 2018). The data from Capi- tal Investment Coordinating Board from January until March 2018 has shown that the total investment set into Indonesia reached 185,3 trillion rupiahs which the government target reached 765 trillion rupiahs in the last year (BKPM, 2018). On the other hand, the data from the World Bank 2018 has shown that since 2013, the incoming funds from the foreign direct investors to Indonesia have been about 23,3 billion US dollars and decreased in 2017 to 21,5 billion US dollars.

Foreign investors make direct investments in developing countries such as Indonesia and aim to look for new markets and political security except for the economic motive. The obvious one is to look for more profit in the future (Eitman et al., 2011). In line with the effort to increase the amount of capital invested by foreign investors, the listed companies in the Indonesia attempted to keep improving the company's performance and value.

Foreign direct investment is an investment activity foreign investors perform through direct financial asset buying from particular companies (Fahmi,

2014). Melvin and Norrbin (2013) have asserted that foreign direct investment is only differentia- ted into portfolio investment based on the ownership percentage. The capital flow of a company is determined as a foreign direct investment when the foreign entity has 10 percent or more of company stock. At the same time, World Bank (2019) has stated that the foreign direct investment shared with the company is related to all liabilities and assets transferred between the holding company and the investment destination company. Moreover, foreign direct investment is also defined as an inflow that aims to obtain management interests that manifest into 10 percent or more of shareholding in companies that operate in economic fields other than the investors.

The listed companies which obtain foreign direct investment in the form of foreign ownership in Indonesia will be the object of research. Foreign investors certainly have the main purpose of making foreign direct investments in a company because the investor will gain the profit as one of the shareholders. The benefit of being shareholders is that they can earn dividends, acquire capital gain, and get voting right in RUPS and RUPSLB forum meetings, which will be a discussion on the issues of dividend distribution until company policies in the future (Fahmi, 2014). The listed companies will try to convince the investors, either the old investor or the new one, to invest in the company.

Since Indonesia is one of the investment destination countries, usually known as emerging markets, it will offer a higher market risk premium than the developed countries with a higher expected return.

The return in listed companies is not apart from the company stock. The return differs between the amount received and invested (Brigham and Hou- ston, 2011).

The empirical definition of a relation between investment performed by the investors with a stock return and the investment is studied and reviewed deeply. However, the relationship between the foreign direct investment and stock return must still be developed. The research done by Kang et al. (2018) has summed up that initial total asset (company investment) of a company which increases every year, can decrease the stock return. Lin and Lin (2018) have also concluded that higher investment will be able to decrease the stock return. Other researchers have assumed that in-

(3)

WWW.JURNALJAM.UB.AC.ID JURNAL APLIKASI MANAJEMEN

420 vestments owned by foreign investors can decrea-

se the volatility of stock prices in the capital market of Vietnam (Vo, 2015).

The investors will first analyze the company's condition, so their investment can result in a higher return. Several empirical studies have exa- mined the relationship between company's finan- cialperformanceandstockreturn.Ngunjiri(2012), in his research finding, has stated a relation between a company's financial performance and stock return on the companies registered in Nairobi Security Exchange (NSE). Even though it is exa- mined through regression analysis, it concluded that if the financial performance is increased, the stock return will not have any significant increase.

This research finding is in line with the other research done by Saleh (2015), which has proposed that in the gas and oil company in the Pakistan, the company performance, which is measured by net profit margin and return on asset, does not have a significant negative effect to the stock return. It is different from the research finding from Anwaar (2016), which defined that when the net profit margin and return on assets are increased, the stock return will have a significant increase on the companies listed in the FTSE-100 Index London, Eng- land.

It is regarded as important information re- lating to the stock return for investors. If a company's profit is increased, it will be the change of sti- ck price. Therefore, investors should consider the company's financial performance in their investment decision-making. Many listed or public companies have recently been registered on the Indo- nesian Stock Exchange. One of them is a manufacturing company. The researchers decided to ch- oose the manufacturing company as the research object because the manufacturing companies registered in Indonesian Stock Exchange have con- sisted of industrial sub-sectors, so it is expected to reflect the reaction of the capital market as a who- le. This research is aimed to identify the effects of foreign direct investment and profitability on the stock return.

Further, the researchers also want to find the role of profitability in mediating the relationship between foreign direct investment and stock return. Several things will be obtained from doing this research. The first, from the theoretical side, is to find out how the role of profitability as a me-

diator between the relationship between foreign direct investment and stock returns. Second, from a practical point of view, it is a reference for investors regarding companies that have foreign direct investments, how profitability and stock returns can be a factor that determines whether they are good in terms of financial performance.

LITERATURE REVIEW Foreign Direct Investment

According to Fahmi (2014), there are two types of investment: real and financial. Financial investment is also divided into two types’ direct investment and indirect investment. In this research, the researchers will exert foreign direct investment. The United States governmental statis- ticians have said that foreign direct investment is defined as ownership of 10 percent of votes or more of the company's stock or stock equivalent in a business that is not categorized into incorporated companies. This definition is also stated by Madu- ra (2012) that the company should be smart to take advantage of foreign business opportunities as direct investment in forms of tangible assets (for example, land, building, or plant) in foreign countries to maximize the value of the multinational companies. Or, the company should divide the capital with other countries and even build a new subsid- iary company.

Melvin and Norrbin (2013) have stated that foreign direct investment is only distinguished into portfolio investment based on the ownership percentage. Thus, company capital flow is estab- lished as a foreign direct investment if the foreign entity has 10 percent or more of company stock.

World Bank (2019) has mentioned that the foreign direct investment that gets into the company is related to all liabilities and assets transferred between the holding company and the investment destination company. Moreover, foreign direct investment is also defined as an investment inflow that aims to acquire management interests manifested in the 10 percent or more of shareholding in the companies operating in economic fields except to the investors.

Profitability

This ratio is aimed to measure the overall effectiveness of the management, which the size of the profit level in the relationship between sales

(4)

421

and investment can indicate. This research will use the ratio to measure the company's financial performance. The researchers use this ratio because of its practicality in identifying the productivity from all company funds used in the loan capital or company equity.

Return on investment (ROI)

This ratio is aimed to measure how far the investment can result in the profit return as expected. In this context, investment can be in the form of company assets invested or placed. The following is the ROI formula:

𝑅𝑂𝐼 =𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝐴𝑓𝑡𝑒𝑟 𝑇𝐴𝑥 𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 Return on equity (ROE)

This ratio is called return on equity (ROE).

This ratio aims to measure how well the company can take advantage of the company resources to make a profit or return on equity. The following is the formula of ROE:

= 𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝐴𝑓𝑡𝑒𝑟 𝑇𝑎𝑥

𝑀𝑜𝑑𝑎𝑙 𝑆𝑒𝑛𝑑𝑖𝑟𝑖 𝑎𝑡𝑎𝑢 𝑆ℎ𝑎𝑟𝑒ℎ𝑜𝑙𝑑𝑒𝑟𝑠 𝐸𝑞𝑢𝑖𝑡𝑦

Stock Return

According to Brigham and Houston (2011), the stock return is defined as a level of stock return or the difference between the amount received and invested. It is then divided by the amount invested.

While according to Hartono (2014), the stock return is a result received from the investment. Ba- sed on those definitions, it is concluded that the stock return is a rate of return on the sale and pur- chase of company shares. The stock return can be received from capital gains or capital losses. It is a difference between the current investment price and the one-time investment price.

HYPOTHESIS DEVELOPMENT

Clegg et al. (2016) have stated that foreign direct investment can increase the company's performance in China. It is in line with the research done by Li and Tanna (2019), which has said that multinational companies are generally more pro- ductive after they get the foreign direct investment

(FDI). Most previous research has concluded that foreign direct investment can increase productivity, technological capability, and export intensity, as has been found by Lo et al. (2016) and Cho et al. (2017). The research done by Zou (2010) has asserted that foreign companies in New Zealand have better performance than local companies.

H1 : The increase in foreign direct investment will be able to increase profitability.

Saleh (2015) has assumed that in gas and oil companies in Pakistan, the company performance, which is measured through net profit margin and return on assets, does not have a significant negative effect on the stock return. The research done by Ngunjiri (2012) has found a relation between a company's financial performance and stock return on the companies registered in Nairobi Securities Exchange (NSE). However, during the testing through regression analysis, it is summed that if the financial performance is increased, the stock return will not have a significant increase.

H2 : The increase in profitability will be able to increase the stock return.

Zaretta (2015) has stated that foreign direct investment through foreign ownership cannot affect the stock return. Based on the hypothesis base, this research will re-examine the relation between foreign investment and stock return micro directly on the identity of each manufacturing company in the Indonesian Stock Exchange. Kang et al. (2018) have stated that greater company investment will raise stock liquidity. The previous research has also argued that the company investment can redu- ce future company risks, which may appear as the effect of the other players or the competitors in the stock exchange (other companies). This condition encourages a hypothesis that foreign direct investment can affect profitability, and profitability can affect stock return, whether, through profitability, the effect of foreign direct investment on stock return will change.

H3 : The increase in foreign direct investment will be able to increase the stock return.

H4 : The increase in foreign direct investment will be able to increase the stock price through the rise in profitability.

(5)

422 Figure 1. Conceptual Model of Research

METHOD

Approach Method

This research exerted a quantitative research method. Quantitative research would result in the data in the form of numbers as a tool to find information that the researchers wanted to know as new information or strengthen the existing information.

Sample

In this research, the total population was all listed manufacture companies registered on the In- donesian Stock Exchange during mid-2019, appr-

oximately 91 companies. The research sample was taken through the purposive sampling method.

This technique was a sampling technique based on the specific considerations. For instance, the manufacturing companies listed during 2016 – 2018 have annual financial reports which reported during 2016 – 2018, the companies which have received foreign direct investment in the form of shareholding above 10 percent, and companies that have never lost during 2016 – 2018. To put in outline the result of data sampling through the purposive sampling technique could be seen in the following Table 1.

Table 1. Research Sample According to the Criteria

No Sub-Sector Jumlah Perusahaan Terbuka

1 Basic and chemical industry 13

2 Miscellaneous industry 9

3 Consumer goods industry 10

Total Company 32

Table 2. Direct Effect Hypothesis Test Results

Relation Among Variables

Coefficient t- statistics p-value Explanation Independent Variable Dependent Variable

Foreign direct investment Profitability (ROA) 0,2477 1,4874 0,1402 Not significant Foreign direct investment Profitability (ROE) 0,1053 2,3146 0,0228 Significant Return on Asset Stock return -0,0006 -0,3022 0,7631 Not significant

Return on Equity Stock return 0,0698 2,7227 0,0084 Significant

Foreign direct investment Stock return 0,00037 0,1657 0,8687 Not significant Source: Primary Data Processed (2020)

Foreign Direct

Investment Stock Return

Profitability 3

1 2

(6)

423

Table 3. Hypothesis Test Results of Indirect Effect

Relation Indirect Coefficient t-statistics Explanation

Foreign direct investment  ROA  Stock return -0,0001 -0,2455 Not significant Foreign direct investment  ROE  Stock return 0,0073 1,6992 Significant Source: Primary Data Processed (2020)

RESULTS

The results of the hypothesis analysis of each independent variable on a dependent variable, which has been acquired through Eviews 10 soft- ware would, be illustrated in the following Table 2.

Finding 1

The result of the hypothesis test on direct effects in Table 2 above referred that the first hypothesis stated that if ROA was used as the profitability measure, the first hypothesis was disappro- ved. While ROE was used as the profitability measure, the first hypothesis was approved. This result indicated that foreign direct investment did not have a significant effect on return on asset (ROA) because the p-value > 0.05, but it could affect the return on equity (ROE) with p-value < 0.05.

Finding 2

The other two hypotheses showed a similar result. In short, both hypotheses were approved if the direct effect involved the ROE variable. Then, it was concluded that ROE and foreign direct investment have effects on stock return.

Finding 3

Table 2 referred that the relationship between foreign direct investment and stock return, me- diated by profitability, has a t-statistics value higher than the t-table value (> 1.66). The value was about 1.6992. Thus, it was stated as significant.

This result also indicated that the profitability through ROE could mediate the effects of foreign direct investment on stock return. Meanwhile, the t- statistics value was lower than the t-table value (<

1.66). The value was about -2.2455. Thus, it was stated as insignificant. This result indicated that the profitability through ROA could not mediate the effects of foreign direct investment on stock return.

DISCUSSION

Foreign Direct Investment and Profitability This research finding showed that more than 10 percent of foreign ownership could not increase return on asset (ROA). This finding was in line with the previous research done by Priyono (2016). Overall, the study stated that foreign ownership did not significantly affect company performance, measured by the return on asset (ROA).

Another research finding stated that the increase of foreign ownership above 10 percent increased the return on equity (ROE). This research finding was in line with the previous research by Hermiyetti and Katlanis (2016) and Moez et al.

(2015). Hermiyetti and Katlanis (2016), in their study, have indicated that the more significant pro- portion of foreign direct investment seen from foreign ownership can increase a company's return on equity (ROE). Moez et al. (2015), in their research, have concluded a significant effect on the increase of foreign direct investment by identifying the effect of foreign direct investment to return on equity (ROE).

This study obtained new results due to tak- ing a different approach from previous research.

The last approach research looks more at things outside the direct profitability ratio, such as the research conducted by Lo et al. (2016) on the gene- ral relationship between the foreign direct investment and the company performance. They look more at the productivity side, technological devel- opments, and increasing exports from companies that have the support of foreign investors. Even so, the results of these previous studies can support the initial initiation of this research.

Profitability and Stock Return

This research finding suggested that the return on asset (ROA) increase could not increase the stock return. This finding was supported by the previous research done by Ngunjiri (2012) and Pu-

(7)

424 tra et al. (2018), which asserted that the increase

of return on asset (ROA) would not be able to increase the stock return of a company. Moreover, Putra et al. (2018) have said that some companies could not use the total asset to increase the company income. Therefore they could not affect the stock return.

The following finding pointed out that the increase in return on equity (ROE) increased the company's stock return. This result was supported by the preliminary research by Saleh (2015) and Putra et al. (2018). The increase in stock return, which was affected by the return on equity (ROE), was because the capital owned by the company management has been effectively used to encour- age the increase of the company's net profit.

This study complements what was done by previous researchers in looking at the effect of company performance on stock returns. Because in addition to researching different subjects and places, the approach to measuring instruments is also different. The research of Saleh (2015) and Anwaar (2016) used a measuring instrument in the form of net profit margin, while in this study, the measuring instrument used returned on equity.

Foreign Direct Investment and Stock Return Previously, studies on foreign direct investment on stock returns have mostly looked at the point of view of developed countries, like the stock conditions of companies that make foreign direct investments in other countries. This research finding showed that foreign direct investment did not have a significant effect directly on the stock return. In other words, foreign investment increased or decreased was derived from the foreign ownership. The company was not able to increase the stock return. Zaretta (2015) has said that foreign ownership did not adequately affect determining the return on the stock exchange. Moreover, the shareholding owned by foreign investors had ex- perienced an increase in the early period towards the end of the session, but it was not highly fluc- tuated and relatively safe. This situation has referred to the high level of foreign investor trust in the stock exchange.

The Mediation Role of Profitability

This research finding referred that foreign direct investment (along with ROE) significantly

affects stock return. In other words, the increase in the foreign direct investment, acquired from more than 10 percent of foreign share percentage, could increase the company's stock return. Furthermore, this research referred that foreign direct investment (along with ROA) has an insignificant effect on stock return.

Profitability has a role in mediation the relationship between foreign direct investment and stock return. The role of profitability as a mediator in the relationship between foreign direct investment and stock return was explained in two find- ings. First, the profitability, which was identified from return on asset (ROA), did not mediate the effect between the foreign direct investment effect and stock return. Second, profitability, identified from return on equity (ROE), did not mediate the effect between foreign investment and stock return.

IMPLICATIONS

The theoretical implication of this research is that profitability can mediate the effect of foreign direct investment and stock returns. Return on equity is more appropriate to be used as a mediator of the relationship between foreign direct investment and stock returns than return on assets in the case study of this research. In practice, from this research, investors must see how strong the capital owned by a company that accepts foreign direct investment and the relation, how the capital they receive can improve or maintain the company's financial performance within a certain period of time.

RECOMMENDATIONS

The next research is suggested to re-explore the other performance variables that suit the foreign direct investment as the independent variables which can affect the stock return, for example, liquidity, solvency ratio, and the ratio of company financial activity. The limitation of the research lies in the phenomenon of time that is trying to be explained. Several previous studies researched foreign direct investment using very long period on the object of research, the average being 10-15 years. In this study, only a time of 5 years was used.

It is because in the case study of this research, registered companies only provided data regarding how much they received foreign direct investment

(8)

425

starting in 2015. It was related to government reg- ulations that had just been issued then. Meanwhi- le, regarding content or variables used as media- tors, this research is limited to profitability ratios.

It also allows further researchers to explore the role of other financial ratios that may be used as mediator variables.

CONCLUSIONS

The foreign direct investment obtained by manufacturing companies listed on the Indonesian Stock Exchange with above 10 percent of foreign ownership could not yet affect the stock return.

Although the foreign direct investment obtained by the manufacturing companies listed on the In- donesian Stock Exchange with above 10 percent of foreign ownership was not able to affect the profitability if it was measured by return on asset (ROA), the foreign direct investment was able to affect the profitability if it was measured by return on equity (ROE).

The profitability measured by return on asset (ROA) could not affect the stock return, while the profitability measured by the return on equity (ROE) could affect the company's stock return.

Further, the profitability measured by return on asset (ROA) was not a mediator in the relation of the effect between foreign direct investment and stock return. Meanwhile, the profitability measured by return on equity (ROE) has a partial mediation role in the relation of effect between foreign direct investment and stock return.

REFERENCES

Anwaar, Maryyam. 2016. Impact of Firms' Perfor- mance on Stock Returns (Evidence from Listed Companies of FTSE-100 Index Lon- don, UK). Global Journal of Management and Business Research: D Accounting and Auditing, Vol. 16, Issue 1.

BKPM. 2018. Realization of Foreign Investment by Sectandfor the January-March 2019 Pe- riod.

Brigham, E. F. and Houston, J. F. 2011. Funda- mentals of Financial Management Transla- tion. 10 Edition. Salemba Empat, Jakarta.

Cho, Yonghee, Daim, Tugrul, U., and Dabic, M.

2017. Investigating the Effects of Foreign Direct Investment (FDI) on Croatian Busi- ness. Journal of High Technology Manage-

ment Research.

Clegg, J., Lin, H. M., Voss, H., Yen, I-Fan., and Shih, Y. T. 2016. The OFDI Patterns and Firm Performance of Chinese Firms: The ModeratingEffectsofMultinationalityStra- tegyandExternalFactors.InternationalBu- siness Review.

Eitman, David K., Stonehill, Arthur I., and Mof- fett, M. H. 2011. Multinational Financial Management. Volume 2. Erlangga, Jakarta.

Fahmi, Irham. 2014. Financial Performance Anal- ysis. Alfabeta, Bandung.

Hartono, Jogiyanto. 2014. Portfolio Theory and Investment Analysis. Tenth Edition. BPFE.

Yogyakarta.

Hermiyetti and Katlanis, Erlinda. 2017. Analysis of the Influence of Managerial Ownership, Ownership Institutional, Foreign Ownersh- ip, and the Audit Committee Company's Fi- nancial Performance. Accounting Research Media, Vol. 6, No. 2.

Indonesia Stock Exchange (IDX). 2018. Financial Report. [Online]. Retrieved March 2019, from: www.idx.co.id.

Kang, Moonsoo, Khaksari, S., and Nam, K. 2018.

Corporate Investment, Short-Term Return Reversal, and Stock Liquidity. Journal of Financial Markets, pp. 68-83.

Li, Chengchun and Tanna, Sailesh. 2019. The Im- pact of Foreign Direct Investment on Prod- uctivity: New Evidence for Developing Co- untries. Economic Modelling.

Lin, Qi and Lin, Xi. 2018. Expected Investment and the Cross-Section of Stock Returns.

Ekonomics Letters.

Lo, D., Hong, F., and Li, G. 2016. Assessing the Role of Inward Foreign Direct Investment in Chinese Economic Development, 1990–

2007: Towards a Synthesis of Alternative Views. Structural Change and Economic Dynamics, (37), pp. 107-120.

Madura, Jeff. 2012. International Financial Man- agement. 11 Edition. South-Western, Cen- gage Learning, USA.

Madura, Jeff. 2015. International Financial Man- agement. Twelfth Edition. Cengage Learn- ing, USA.

Melvin, Michael and Norrbin, Stefan C. 2013.

Chapter 11, Direct Foreign Investment and International Lending. International Money

(9)

426 and Finance, 8 edition, pp. 201-221.

Moez, D., Marouan, K., and Tahar, R. M. 2015.

Does Foreign Ownership Influence Firm Profitability? Evidence from the Tunisian Context. International Journal of Econom- ics and Finance, Vol. 7, No. 8. Canadian Center of Science and Education.

Ngunjiri, Ndirangu. 2012. Relationship between Firms' Financial Performance and Stock Return for Firms Listed at Nairobi Securiti- es Exchange. Degree of Master, School of Business, University of Nairobi.

Priyono, Dwi. 2016. Analysis of the Effect of For- eign Shareholders Ownership on Perform- ance Registered Companies that Listed in the Kompas 100 Index on the Indonesia Sto- ckExchange.Jogjakarta:GadjahMadaUni- versity.

Putra, Febriyansyah, L., Nurlaela, S., and Samro- tun, Y. C. 2018. Effect of Return on Asset, Return on Equity, Debt to Equity Ratio to Return Stock Company Property and Real Estate in Indonesia Stock Exchange. PRO- CEEDING The 2nd International Confer-

ence on Technology, Education, and Social Science.

Saleh, Muhammad. 2015. Relationship between Firm'sFinancialPerformanceandStockRe- turns: Evidence from Oil and Gas Sector Pakistan. Journal of Energy Technologies and Policy, Vol. 5, No. 10.

Vo, X. V. 2015. Foreign Ownership and Stock Re- turn Volatility Evidence from Vietnam. Jo- urnal of Multinational Financial Manage- ment.

World Bank. 2019. Foreign Direct Investment.

[Online]. Retrieved March 2019, from:

www.data.worldbank.org/indicator.

Zaretta, Bara. 2015. The Effect of Foreign Invest- ment on Market Returns with Vector Auto- regression (VAR): A Study on the Indonesia Stock Exchange, the Period January 2008- December 2013. Semarang: Diponegoro University.

Zou, Yi. 2010. The Impact of Inward FDI on Host Country: Firm Performance in New Zea- land. Degree of Master, International Busi- ness, Victoria University of Wellington.