Inflation as moderating effect of financial performance, earnings management, and firm value on stock return

Abstract

Purpose: This study aims to investigate the impact of the current ratio, debt-to-equity ratio, return on assets, earnings management, and firm value on stock returns, with inflation serving as a moderating variable, specifically in essential industrial and chemical manufacturing companies listed on the Indonesia Stock Exchange (IDX).

Methods: This study aims to investigate the impact of the current ratio, debt-to-equity ratio, return on assets, earnings management, and firm value on stock returns, with inflation serving as a moderating variable, specifically in essential industrial and chemical manufacturing companies listed on the Indonesia Stock Exchange (IDX).

Findings: The findings of this study indicate that 1. the current ratio does not affect stock returns. 2. The debt-equity ratio impacts stock returns. 3. return on assets does not influence stock returns. 4. earnings management does not affect stock returns 5. firm value positively affects stock returns. 6. inflation does not moderate the current ratio and return on assets with stock returns; however, inflation does moderate the relationship between the debt-to-equity ratio and earnings management with stock returns.

Practical Implications: This study's practical implications suggest that investors should pay close attention to the debt-to-equity ratio and firm value when making investment decisions in basic industrial and chemical manufacturing companies. Furthermore, as inflation moderates specific financial ratios, investors should consider the economic climate, particularly inflation trends, when assessing the potential return on their investments.