The Influence of Profitability on Stock Returns with Firm Size as a Moderating Variable on LQ45 Entities Listed on the Indonesia Stock Exchange (2021-2025) (Journal of Accounting and Finance Management)

Summary

• The study analyzes the effect of ROA, ROE and NPM on stock returns, with firm size as a moderating variable, among LQ45 companies for 2021–2025.p.1
• ROA has no significant effect on stock returns, ROE has a significant positive effect and NPM has a significant negative effect.p.1
• The NPM coefficient on stock returns is -1.120716 with a probability of 0.0176.p.7
• Firm size moderates ROA (coefficient -0.86182, probability 0.0165) and ROE (coefficient 0.570629, probability 0.0184) but not NPM (coefficient -0.09122, probability 0.3617).p.7
• The model R-squared is 0.309840 and the adjusted R-squared is 0.117733.p.8

Key insights

1. Firm size moderates the ROA effect on stock returns in a negative direction (coefficient -0.86182, probability 0.0165).p.7
2. Firm size moderates the ROE effect on stock returns in a positive direction (coefficient 0.570629, probability 0.0184).p.7
3. Firm size does not moderate the effect of NPM on stock returns (probability 0.3617).p.7
4. Adjusted R-squared of 0.117733 indicates that most variation in stock returns is explained by factors outside the model.p.8
5. Firm size strengthens the effect of ROE on stock returns, suggesting larger entities may send stronger signals to investors.p.9
6. ROA has no significant effect on stock returns, so it is not yet an important signal for investors' decisions.p.8