The Influence of Return on Equity (ROE) and Debt to Equity Ratio (DER) on Stock Prices

  • Lusia Marleni Halek Pamulang University
  • Eka Rahim Pamulang University
DOI: https://doi.org/10.70001/idea.v4i2.385
Keywords: Return on Equity (ROE); Debt to Equity Ratio (DER); Stock Price; Financial Performance; Capital Structure

Abstract

The purpose of this study is to examine the effect of Return on Equity (ROE) and Debt to Equity Ratio (DER) on the stock price of PT Adhi Karya (Persero) Tbk during the 2014–2024 period, both partially and simultaneously. The study aims to determine whether profitability and leverage provide significant signals to investors and how these financial ratios influence the company’s market value over time. Methodology/approach – This research uses a quantitative method with a causal associative approach. According to Sugiyono (2018:65), a causal associative approach examines the relationship between two or more variables, where the relationship is characterized by cause and effect. In this study, the independent variables (ROE and DER) act as the influencing factors, while the dependent variable (stock price) serves as the factor being influenced. Findings – It The findings of this study indicate that Return on Equity (ROE) has a significant partial effect on the stock price of PT Adhi Karya (Persero) Tbk during the 2014–2024 period, as shown by a t-value of 3.491 and a significance level of 0.008 < 0.05. This result suggests that higher profitability provides a positive signal to investors, thereby increasing the company’s stock price. Novelty/value –  This study provides novelty by analyzing the long-term impact of Return on Equity (ROE) and Debt to Equity Ratio (DER) on stock prices over an extended period of eleven years (2014–2024), focusing on PT Adhi Karya (Persero) Tbk, a state-owned enterprise in the construction sector.

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Published
2025-12-01
How to Cite
Halek, L. M., & Rahim, E. (2025). The Influence of Return on Equity (ROE) and Debt to Equity Ratio (DER) on Stock Prices . Indonesian Development of Economics and Administration Journal, 4(2), 148 - 158. https://doi.org/10.70001/idea.v4i2.385
Issue
Vol 4 No 2 (2026): IDEA Journal
Section
Articles

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