The Effect of Financial Performance and Financial Reporting Quality on Stock Prices of Conventional Banking Companies

Abstract

Purpose: This study aims to analyze the effect of financial performance and the quality of financial reports on stock prices in conventional banking companies listed on the Indonesia Stock Exchange (IDX) during the 2022–2025 period.

Design/methodology/approach: This quantitative study utilizes panel data regression analysis with SPSS Ver. 20 software. This study employs a purposive sampling technique, resulting in a sample of 14 conventional banks that have complete financial report data and stock closing prices for the research period. Financial performance is measured using key banking ratios (ROA, ROE, DER, and NIM), while financial report quality is assessed through relevance, reliability, and timeliness of information delivery.

Findings: The results of this study demonstrate that ROA has a positive and significant effect on Stock Prices, while Financial Report Quality has no significant effect. ROE has a negative and significant effect on Stock Prices, and the simultaneous effect of ROA, ROE, and Financial Report Quality on Stock Prices is found to be insignificant.

Practical implications: The findings provide empirical evidence that can assist bank management, investors, and regulators in their efforts to improve reporting transparency and maintain capital market stability, by clarifying the simultaneous role of financial performance and reporting quality in influencing stock valuations.

Originality/value: This study contributes to the existing literature by offering empirical evidence on the combined effect of financial performance and financial reporting quality in determining conventional bank stock prices, specifically highlighting the interplay between operational health and informational transparency within the Indonesian banking context.

Paper type: Empirical.