Profitability, Managerial Ownership, and Audit Committee on Stock Returns in Indonesian Commercial Banks

Abstract

Profitability shows the managerial ability to generate profits for the company. A high level of profitability gives a signal to investors about the company's better prospects in the future, thereby attracting investors and ultimately increasing stock prices. Managerial ownership also shows investors that managers are concerned about the company's development, so investors will assume that managers will work better if they are also shareholders. Meanwhile, the audit committee is in charge of internal supervision for the company. This study analyses profitability, managerial ownership, and audit committee to stock return in Indonesian commercial banks during the Covid-19 pandemic. The population of this study is companies in the banking sector listed on the Indonesia Stock Exchange from 2018 to 2020. Sampling was done through the purposive sampling technique, thus obtaining 44 companies as research samples. The analysis technique used multiple linear analyses. The results of this study indicate that profitability has a significant negative effect on stock returns. It could have happened due to the COVID-19 pandemic in 2020, which caused all stocks to drop drastically. In contrast, managerial ownership and the audit committee have no partial effect on stock returns because managerial ownership has a minimal influence. So, it is considered less effective in influencing administrative actions in decision making and the audit committee, which does not affect whichever several auditors will not affect the company's performance through the total assets or profits that the company will obtain. This study implies that, during the COVID-19 pandemic, the variables studied have a minimal effect on stock returns because psychological factors influence stock prices in the form of investor panic, which makes banking sector stocks have low and even negative returns.