Effects of Financial Ratios in Early Warning System and Macro-Economic to Stock Returns (Empirical Study at Insurance Companies at Indonesia Stock Exchange 2014 – 2018)

Abstract

The objective of this research is to determine both partial and simultaneous effects of financial ratios in Early Warning Systems that consist of claims liability ratio, liquidity ratio, and SBI rate toward the stock return of insurance companies for the period 2014 – 2018 in Indonesia Stock Exchange. The research used a descriptive-analytical method. The research was conducted by an explanatory research technique in those insurance companies that were listed and active in Indonesia Stock Exchange by using secondary data, that is, financial statements of insurance companies for a period 2014-2018 and SBI rate, whereas the data analysis method used was a multiple regression by using SPSS. The result of the partial test showed that incurred claims liability ratio has a significant negative effect on the stock return of the insurance companies, the liquidity ratio has a significant positive effect on the stock return of the insurance companies, and the SBI rate has a significant positive effect on the stock return of the insurance companies. Meanwhile, the result of the test simultaneously showed that financial ratios in the early warning system (incurred claim liability ratio, liquidity ratio, and SBI ratio) have a significant effect on the stock return of the insurance companies in the Indonesia Stock Exchange.

Keywords: claim liability ratio, liquidity ratio, SBI ratio, stock return