An Indirect Impact of the Price to Book Value to the Stock Returns: An Empirical Evidence from the Property Companies in Indonesia


  • M. Shabri Abd. Majid Faculty of Economics, University of Syiah Kuala, Darussalam, Banda Aceh
  • Benazir . Faculty of Economics, University of Syiah Kuala, Darussalam, Banda Aceh



Dividend payout ratio, return on equity, growth, degree of financial leverage, price to book value, stock returns.


This research empirically examines the influence of Dividend Payout Ratio (DPR), Return on Equity (ROE), Growth, and Degree of Financial Leverage (DFL) on the Price to Book Value (PBV) of the property companies in Indonesia. It also attempts to explore the indirect effects of the DPR, ROE, Growth, and DFL on the stock returns via the PBV. 36 property firms, which are listed in the Indonesian Stock Exchange from 2007 to 2013, were selected to be analyzed using the Path Analysis. The result of this research indicates that the variable of growth is found to have a significant impact on PBV. Meanwhile, the DPR, ROE, and DFL were found to be insignificant. The DPR, ROE, Growth, and DFL were found to affect PBV simultaneously. This study also proved that the PBV has a significant effect on the stock returns, while the DPR and DFL were not. The study also found that the DPR, PBV, and DFL have simultaneously affected stock returns of the property companies in Indonesia. The finding of this study implied that to predict the stock returns of the property companies, the investors and companies should take into account the changes in the growth and PBV.


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