Open AccessINVESTIGATING THE ROLE OF ISSUING CORPORATE ISLAMIC BOND AND SELECTED DETERMINANTS ON FIRM'S PROFITABILITY
Author(s) -
Najmudin Najmudin,
Ekaningtyas Widiastuti,
Ghifari Taufiqurrahman
Publication year - 2020
Publication title -
humanities and social sciences reviews
Language(s) - English
Resource type - Journals
ISSN - 2395-6518
DOI - 10.18510/hssr.2020.855
Subject(s) - profitability index , stock exchange , bond , leverage (statistics) , monetary economics , panel data , exchange rate , interest rate , business , islam , economics , inflation (cosmology) , return on assets , financial system , finance , econometrics , philosophy , physics , theology , machine learning , theoretical physics , computer science
Purpose of the study: The purpose of this study is to investigate the effect of corporate Islamic bond issuance, internal and macroeconomic factors on firm's profitability. The internal factors involved potentially as determinants of profitability are leverage and firm size. Meanwhile, the macroeconomic factors are economic growth and the inflation rate.
Methodology: The sample is taken from companies listed at Indonesia Stock Exchange (IDX) and selected from 24 companies. The sample is 21 companies whose data completely and issued the Islamic bond during the period 2012 until 2018. Moreover, the panel data regression was employed as an analytical tool to test the data.
Main Findings: The results suggest that Islamic bond issuance and financial leverage have a negative influence on profitability, firm size has no significant influence on profitability, and economic growth and inflation rate have a positive influence on profitability.
Applications of this study: A firm, as well as an investor, must consider the lower Islamic bond issuance and debt proportion. Besides, they should anticipate decreased economic growth and the inflation rate.
Novelty/Originality of this study: This study observes evidence from Indonesia Stock Exchange (IDX) that develops the previous studies and adds references for further studies about Islamic bond issuance. Also, it combines Islamic fund source and firm-specific internal as well as macroeconomic factors (economic growth and inflation rate) macroeconomics factors insert what are the macroeconomic factor which affects the profitability of the business to give a clear picture of how the effect of all factors on profitability.