THE EFFECT OF ECONOMIC VALUE ADDED, FREE CASH

FLOW, CORPORATE GOVERNANCE, AND EARNING QUALITY

WITH DIVIDEND POLICY AS A MODERATING VARIABLE ON
STOCK RETURN
Annisa Kanti
Trisakti School of Management
Jl. Kyai Tapa No. 20 Grogol, Jakarta Barat, Indonesia
Email: [email protected], Tel: 021-56965427

ABSTRACT
The purpose of this study was to examine the effect of economic value added, free cash
flow, corporate governance and earnings qulity with the dividend policy as a moderating
variable on stock returns. This research uses multiple regression testing. The research
sample is a manufacturing company listed on the Jakarta Stock Exchange by taking a
sample of 49 companies in 2016. The selection of public companies that fall into the
category of manufacturing companies is reviewed based on consideration of the
similarities in their operations and production activities and this industry group which is
relatively larger compared to other industry groups on the Indonesia Stock Exchange,
thus dominating and having a major contribution to market development capital,
especially shares in Indonesia. Determination of the sample was done using purposive
sampling method. Based on the analysis, the research conclusions can be obtained as
follows; Economic Value Added has a positive effect on Stock Returns, Free Cash Flow
has a negative effect on Stock Return, Corporate Governance has a positive effect on
Stock Returns, Profit Quality does not have a positive effect on Stock Returns, Dividend
Policy has a positive effect on Stock Returns, Dividend Policy does not strengthen
positive influences Economic Value Added on Stock Returns, the Dividend Policy does
not weaken the negative influence of Free Cash Flow on Stock Returns, the Dividend
Policy does not strengthen the positive influence of Corporate Governance on Stock
Returns and the Dividend Policy does not strengthen the positive influence of Earning
Quality on Stock Returns.

Keywords: economic value added, free cash flow, corporate governance, earning qulity,
dividend policy, Stock Return.

1. INTRODUCTION
Economic Value Added (EVA) is one variant of VBM where assessing company
performance is based on the creation of added value generated by the company.
Economic Value Added (EVA) is basically a management technique developed by the
Stern Stewart & Company (Stern, 1985; Stewart, 1991; Stern, Stewart and Chew, 1995)
The EVA concept provides a way to calculate the economic value achieved or made by
the company during certain time period.

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 Cloud, Siddique, Sarwar (2014) states that "Economic Value Added (EVA) can
be understood as a change that occurs between NOPAT (Net Operating Profit after
Taxes) reduced by changes in the COC (Cost of Capital) of the company used to generate
profits. clean operation "Therefore, EVA basically depends on operating company
profits, taxes, debt levels, and capital costs. In the EVA concept, "companies must be
able to distinguish activities that create value added and non-value added, so that
management can focus on increasing the effectiveness and efficiency of the organization
as a whole." The concept of EVA is based on the weighted average cost of capital). "The
existence of Economy Value Added (EVA) becomes relevant for measuring company
performance based on value because EVA is a measure of economic value added
resulting from profits (profits) received by the company above the annual cost of capital,"
as a result of activities or management strategy. "With the creation of EVA this will
affect the size of the return received by shareholders (stakeholders)."
Corporate Governance as the principle that directs and controls the company (all
company activities) whose purpose is to achieve balance and power and then the company’s
authority in providing accountability to the shareholders particularly and stakeholders generally.
(Solomon, 2008) Corporate Governance also organize the connection and responsibility or
accountability of the company to the members of non-shareholder stakeholders. Indonesian
capital market has developed quite rapidly compared with previous years. The development of
capital market can be seen from the increasing number of issuers listed on the Indonesia Stock
Exchange. The application of corporate governance in Indonesia is also growing. It is mainly due
to encouragement from the government to companies. In Indonesia, the companies implement
good corporate governance.
Stock return can be interpreted as a return on stock in accordance with expectations, on
an investment that has been made (Jogiyanto, 2013, p. 69). According to Tandelilin (2010, p.
39), the main reason people invest is to make a profit. In the context of investment
management, the profit level is referred to as return. In the context of investment
management, it is necessary to distinguish between the expected return and the actual return.
Hope return is the level of return anticipated by investors in the future, While the actual return
is the rate of return that has been obtained by investors in the past (Tandelilin, 2010, p. 40).

2. THEORETICAL RESEARCH
2.1 AGENCY THEORY
This agency theory was developed by Jensen and Meckling (1976) "Agency
theory is a theory related to principal relations with agents. This agency theory makes a
model of a contractual relationship between the manager (agent) and the owner
(principal). Principal delegates a decision-making responsibility to the manager (agent) in
accordance with the employment contract. The duties, authority, rights and
responsibilities of the agent and principal are regulated in a mutually agreed work
contract."

2.2 SIGNALLING THEORY

Brigham and Houston (2014) stated that "signal theory (signaling theory) is an
action taken by company management that provides guidance for investors about how
management views the company's prospects. Management has accurate information
about the value of the company that is unknown to investors, so if management submits

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information to the market, the information will be responded to by the market as a signal
of certain events that can affect the value of the company."

2.3 FINANCIAL STATEMENT

In carrying out its business activities, within a certain time the company will
report its financial performance through financial statements. In PSAK 1 (SAK 2017
Revision), it is explained that "financial statements are a structured presentation of
financial position and financial performance. Thus, financial statements reflect how the
company conditions really are, both from the financial condition to the condition of a
business that is being or will be run."
2.3.1 THE PURPOSE OF THE FINANCIAL STATEMENT
Based on PSAK 1 (SAK Revision 2017) explains that "the purpose of financial
statements is to provide information about the financial position, financial performance,
and cash flow of an entity that is beneficial to most financial report users in making
economic decisions. The report on benefits reflects the company's performance through
the results of management's accountability for the use of resources managed and
entrusted by them."

2.4 ECONOMIC VALUE ADDED AND STOCK RETURN

Positive EVA if the return generated is higher than the rate of return desired by
investors. "With this we can clearly see the relationship of a significant effect between
EconomicValue Added and Stock Return. In theory "the higher the Economic Value
Added company, the higher the investor's trust in investment decision making."
Cardenete and Sancho (2006) explain “how the economic impact of the market in a provided
economic climate might be recognized as well as quantified simply by market analysis. A lot of
literature shows diverse points of views your impact connected with industry components on
investment profits.” Based on this description, the hypotheses that can be arranged are as
follows:
H1: Economic Value Added has a positive effect on Stock Return.

2.7 FREE CASH FLOW AND STOCK RETURN

In Frank and Keith, (2012) it is said that "Distribution of free cash flows aimed at
all company investors to fulfill all claims from parties interested in the company, namely
shareholders and creditors (bondholders), is referred to as free cash flow for companies
(Flow to the Firm Free Cash). Whereas free cash flow that has been distributed to meet
loan financing needs and is available to be paid to shareholders in the form of dividends,
is called free cash flow to shareholders (Free Cash Flow to Equity)."
In determining the performance that is directly related to Stock Returns, "free
cash flow to shareholders (Free Cash Flow to Equity)" is more relevant to be used in
measuring the ability of companies to create cash that has an impact on increasing
shareholders' wealth. In theory, Free Cash Flow is a free cash flow produced by the
company after deducting the debt interest from funding and will be distributed to
investors. Jensen (1986) predicted that “except for firms with profitable unfunded investment
projects, stock prices will rise with unexpected increases in payouts to shareholders such as
increased dividends and that stock prices will fall with reductions in payments or new requests
for funds for example the sale of debt.” Zurigat, Sartawi and Aleassa (2014) noted that “the

3
agency problem and its costs will be more severe in the presence of free cash under
management control.” Richardson (2006) also established that over–investment is
concentrated in firms with highest free cash flows. These studies concur with (Jensen, 1986)
proposition that “free cash flows have a negative impact with various financial performance
measures.” Based on this description, the hypotheses that can be arranged are as follows:
H2: Free Cash Flowa has a negative effect on Stock Return.

2.8 CORPORATE GOVERNANCE AND STOCK RETURN

Corporate governance arises because there is a separation between ownership and
company control, or often known as agency problems. Agency problems in the
relationship between capital owners and managers are "how difficult the owner is in
ensuring that the funds invested are not taken over or invested in projects that are not
profitable so they do not bring returns.” Asward and Lina (2015) states that “the conflict of
interest can be minimized through a monitoring mechanism that aims to align the various
interests. The corporate governance mechanism can be interpreted as a game rule, procedures,
and clear relationships between the parties that make decisions and those, called the
monitoring mechanism, who will supervise the decision.” According to Salim (2017) “the
implementation of GCG by the company along with the provisions in it will make the company
better than companies that do not implement GCG.” Based on this description, the
hypotheses that can be arranged are as follows:
H3: Corporate Governance has a positive effect on Stock Return.

2.9 EARNING QUALITY AND STOCK RETURN

In the context of stock prices, to the extent that the market fixates on reported income
and does not take into account the quality of firms’ earnings, there may be temporary
deviations of prices away from their correct values. Put another way, measures of earnings
quality may have predictive power for future movements in stock prices then it impact stock
return (Chan et. Al. 2006) . Along with the increase in stock prices, the actual capital gains
from these shares also increased. This is because actual return is the difference between
the current share price and the previous stock price. So that company management can
see the quality of earnings based on the company's performance. If the company has the
ability to increase profits, stock prices tend to increase. On the basis of these
explanations, the hypotheses that can be arranged are as follows:
H4: Earning Qualitya has a positive effect on Stock Return.

2.10 DIVIDEND POLICY AND STOCK RETURN

The larger payment of dividends will maximize the shareholder's current wealth.
The dividend policy in question is the optimal dividend policy, which is a dividend
policy that produces a balance between current dividends and future growth and
maximizes the company's stock price, which in turn can maximize company value and
shareholder prosperity. Suwarna (2012) stated that “The dividend policy decision for a firm is
very important thus the method that managers attain making dividend policy decisions and
whether or not they follow an accurate set of guidelines or precise strategies to make these
decisions will impact on the future performance of the firms. Financial management’s goal is
shareholder’s wealth maximization, which means maximizing the value of the company as
measure by the price of common stock. This goal can be achieved by giving the shareholders a

4
fair payment on their investments.” On the basis of these explanations, the hypothesis that
it can be composed is as follows:
H5: Dividend Policy has a positive effect on Stock Return.
2.11 MODERATION OF THE DIVIDEND POLICY TO THE RELATIONSHIP
BETWEEN ECONOMIC VALUE ADDED AND STOCK RETURN.
The main reason behind the research is using Ecomomic Value Added (EVA) "as
one of the factors that influence cash dividend policy" because the EVA method of the
company can prioritize its attention on the results of company values which can include
"the cost of capital concept of reducing profits with the cost of capital where the cost of
capital reflects the level of risk of the company. On the basis of the explanation, "the
hypothesis that can be compiled is as follows:
H6: The Dividend Policy strengthens the positive influence of Economic Value Added on
Stock Returns.

2.12 MODERATION OF THE DIVIDEND POLICY ON THE RELATIONSHIP

BETWEEN FREE CASH FLOW AND STOCK RETURN
John and Williams (1987) predict a relationship between dividends and stock prices.
The Dividend Policy is a decision regarding dividend policy, whether profit is divided in
the form of dividends or partially reinvested. The Dividend Policy itself shows the
amount of profit that will be paid to shareholders in the form of dividends. The greater
the profit obtained the greater the dividends paid. On the basis of the explanation, the
hypothesis that can be arranged is as follows:
H7: The Dividend Policy weakens the negative influence of Free Cash Flow on Stock
Returns.

2.13 MODERATION OF DIVIDEND POLICY TOWARDS THE RELATIONSHIP

BETWEEN CORPORATE GOVERNANCE AND STOCK RETURN
The higher the value of the Dividend Policy, the more investors or shareholders
will benefit, but on the other hand it will reduce retained earnings. This dividend policy is
a very difficult policy, because the company must decide whether to share the benefits of
the shareholders' conditions or hold them back and if shared, how much of the profit will
be distributed as dividends. To maintain both of these interests, the company must take
an optimal dividend policy. On the basis of the explanation, the hypothesis that can be
arranged is as follows:
H8: The Dividend Policy strengthens the positive influence of Corporate Governance on
Stock Returns.

2.14 MODERATION OF DIVIDEND POLICY TO THE RELATIONSHIP

BETWEEN EARNING QUALITY AND STOCK RETURN
Accruals are reliably, negatively related to future stock returns, as first documented by
Sloan (1996). Firms with high current accruals experience a sudden, large increase in accruals
over the prior year, accompanied by a substantial deterioration in cash flows. Quality earnings
are profits that are useful in making decisions of its users. Therefore, the truth of
information about profits reported by each company is an important aspect to be
considered. The importance of earnings information for its users triggers the emergence
of management practices of profits made by management so that the earnings

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information looks better. On the basis of the explanation, the hypothesis that can be
arranged is as follows:
H9: The Dividend Policy strengthens the positive influence of Earning Quality on Stock
Return.
3. RESEARCH METHOD
3.1 SAMPLE AND DATA RESEARCH
This form of research is a study of causality. Causality research is a form of
research that analyzes the influence of independent variables on the dependent variable,
where the characteristics of the problem in this study are "the influence of independent
variables on the dependent variable.

3.2 RESEARCH FRAMEWORK AND MEASUREMENT OF VARIABLES

The framework of this research is illustrated as follows:
Independent Variable
Economic Value
Added

Free Cash Flow Dependent Varieble

Stock Return
Corporate
Governance

Earning Quality

Dividend Policy

Moderation variable

3.2.1 ECONOMIC VALUE ADDED”

Economic Value Added is a company performance measurement tool to assess
the success rate of an activity in terms of the interests and expectations of funders or
shareholders to generate profits from company activities. EVA itself creates added value
for shareholders or investors, so EVA can be said to be able to assess whether or not the
company is good at increasing the prosperity of its shareholders."
NOPAT−Capital Charge
EVA =
number of shares outstanding

3.2.2 FREE CASH FLOW”

“Cash flow (cash flow) is a simple description of the cash inflows and outflows of
cash for activities carried out by the company in order to carry out its business processes.
Cash flows that have been free from all operational needs, working capital and needs
long-term investment in the form of fixed assets, called free cash flow."

6
 OCF−NFAI−NCAI
FCF =
Jumlah saham beredar

3.2.3 CORPORATE GOVERNANCE”

Corporate Governance is a set of rules that establish stakeholder relations with
their rights and obligations (FCGI, 2011). In this study measured using the Asean
Corporate Governance Scorecard (ACGS) instrument."
”
The total score of items used by the company
GCG: “
𝑇ℎ𝑒 𝑚𝑎𝑥𝑖𝑚𝑢𝑚 𝑠𝑐𝑜𝑟𝑒 𝑑𝑖𝑠𝑐𝑙𝑜𝑠𝑒𝑑 𝑏𝑦 𝑡ℎ𝑒 𝑐𝑜𝑚𝑝𝑎𝑛𝑦 (121)

3.2.4 EARNING QUALITY

Accrual quality is how much accrual can be mapped into realized cash flows.
Accrual quality is often used as a proxy measure of the quality of earnings attributed to
Dechow and Dichev (2002). Accrual quality is obtained from "estimates of operating
cash flows of the previous period, current, and future periods in changes in working
capital
TCAj,t = α + β1 CFO t-1 + β2 CFOt +β3 CFO t+1 + β4 ∆REV + β5 PPE + e

3.2.5 MODERATION VARIABLE

Dividend policy according to Susanto and Tirok (2011), "is an inseparable part of
the company's funding decisions. Dividend policy is a decision whether the profits
obtained by the company at the end of the year will be shared with shareholders in the
form of dividends or will be held to increase capital to finance investment in the future."
Dividen Per Share
DPR = X 100
Earning Per Share

3.2.6 DEPENDENT VARIABLE”

The dependent variable in this study used Stock Return. Stock Returns are profits
obtained by investors because they have invested in shares. So that the total stock return
is the profit earned from current income through dividend distribution and capital gain.
Pt−Pt−1
Stock Return =
Pt−1

4 RESULTS
4.1 DESCRIPTIVE STATISTICS
N Minimum Maximum Mean Std. Deviation

Return Saham 42 -0,7463 23,5431 0,456586 3,6772407

Economic Value Added 42 -77,8837 82,0814 1,622009 18,3641306

Free Cash Flow 42 -50,4478 27,7388 -0,238480 9,2232167

Corporate Governance 42 0,6612 0,9421 0,839630 0,0580398

Earning Quality 42 0,0138 0,3845 0,107638 0,0839428

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 Dividend Policy 42 0,0278 0,9791 0,355621 0,2214753

Valid N (listwise) 42

4.2 HYPOTHESIS TESTING

Significance and Coefficient of Regression
Stock Return
Variable Expected coefficien t- Sig. Sig. Result
t statistic 1-Tailed
(Constant) -7,881 -4,012 0,000

Economi Value Added + 0,150 16,039 0,000 0,000 H1 accepted

Free Cash Flow - -0,258 -5,688 0,000 0,000 H2 accepted

Corporate Governance + 8,653 3,634 0,001 0,000 H3 accepted

Earning Quality + 1,745 0,817 0,420 0,210 H4 rejected

Dividend Policy + 17,289 2,653 0,012 0,006 H5 accepted

Economi Value Added. + 0,000 H6 rejected

-0,485 -29,340 0,000
Dividend Policy

Free Cash Flow. - 0,000 H7 rejected

0,614 5,399 0,000
Dividend Policy

Corporate Governance. + 0,011 H8 rejected

-18,665 -2,380 0,023
Dividend Policy

Earning Quality. + 0,067 H9 rejected

-6,793 -1,535 0,135
Dividend Policy

R-Square 0,988

Adjusted R2 0,985

F-Statistik 302,266

Sig. 0,000

The determination coefficient of the moderation regression test model 1 can be

equal to 0.985 referring to the adjusted R2 value. This means that the contribution of the
influence that can be given by all independent variables which is equal to 98.5% or
changes in stock returns can be explained by all independent variables at 98.5% with the
remaining 1.5% explained by all other independent variables outside the research this.
Then, the F statistic it can be concluded that the determination of 98.5% is significantly a
simultaneous effect on the dependent variable.

Based on the results of the table test above the multiple regression equation formed is as
follows:

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SR = -7,881 + 0,150 EVA -0,258 FCF + 8,653 CG + 1,745 EQ + 17,289 DP -0,485
EVA*DP + 0,614 FCF*DP -18,665 CG*DP -6,793 EQ*DP

4.2.1 INDIVIDUAL PARAMETER SIGNIFICANCE TEST RESULTS (T TEST)

4.2.1.1 ECONOMIC VALUE ADDED HAS A POSITIVE INFLUENCE ON
STOCK RETURN
The results of the study's authors support the results of previous studies conducted
by Awan, Siddique, Sarwar (2014). EVA is closely related to stock returns compared to
accruals. This indicates that the higher the welfare created within the company, the better
the return value, because a measure of company performance using EVA is to see
whether the company is able to increase the wealth of its shareholders.

4.2.1.2 FREE CASH FLOW HAS A NEGATIVE INFLUENCE ON STOCK

RETURN
The research results of the authors support the results of previous studies
conducted by Oler and Picconi (2005) argued that the consequences of high levels of free cash
flow are not fully understood by the shareholders who believe free cash flow reflects good
performance. They found that negative consequences of free cash flow are only detected by the
shareholders two years after the establishment of these funds after misuse by managers and
performance decreases. Free positive cash flow has no effect on the creation of
shareholder value, while negative free cash flow has a significant positive effect on
shareholder value because of the investor's perception that the company uses free cash
flow to invest and provide opportunities in the future. So that investors can use free cash
flow information as a consideration in the creation of shareholder value.

4.2.1.3 CORPORATE GOVERNANCE HAS A POSITIVE EFFECT ON STOCK

RETURN
With the concentration of corporate governance, large shareholders such as
institutional investors will be able to monitor the management team more effectively and
can increase company value. The value of the company will reflect the condition of the
company's fundamentals which will affect stock prices. Changes in stock prices will
determine the company's stock return.

4.2.1.4 EARNING QUALITY HAS A POSITIVE INFLUENCE ON STOCK

RETURN
This is contrary to the research of Susilowati and Turyanto (2011). This might be
due to the level of disclosure of financial statements of companies that are still low in the
capital market, making investors interested in seeing information in financial statements
as investment decision making. This is in line with Puspita (2017: 1026) who argues that
the Indonesian capital market is still ineffective, making investors still consider
conditions outside the company and outstanding issues as one of the factors in making an
investment decision.

4.2.1.5 DIVIDEND POLICY HAS A POSITIVE INFLUENCE ON STOCK

RETURN

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 This study supports the opinion of Easterbrook (1984) argued that lower debt to
equity ratios reduce a firm’s chance of bankruptcy, reduces risk and therefore transfers benefit
from shareholders to bondholders as projects are financed from retained earnings. Therefore
shareholders prefer management to pay dividends from retained earnings and firms taking on
risky projects to avoid unwarranted interest payments to bondholders. On the other hand
agency theorists (Verma, 1994) argued that firms pay dividends to deal with agency problems.
Jensen (1986) also pointed out that payouts to shareholders such as dividend payments reduce
free cash flows at management’s discretion and then leads to increases in stock prices. Husnan
and Pudjiastuti (2013) which states that "companies that have a high DPR certainly cause
the value of their share prices to increase because investors have a certainty of better
dividend distribution of their investments." This increase helped boost the number of
requests for these shares, which also increases stock prices and impacts on positive
returns.
4.2.1.6 THE DIVIDEND POLICY STRENGTHENS THE POSITIVE INFLUENCE
OF ECONOMIC VALUE ADDED ON STOCK RETURNS
Dividend policy has a negative effect on stock returns because the greater the
amount of dividends distributed to companies can reduce the stock returns received by
investors. With the existence of a large dividend payment will reduce the ability of
companies to invest so that it will reduce the growth rate of the company which in turn
will reduce stock prices. Decreasing stock prices will result in decreasing stock returns
and the impact of not increasing economic value in the company because the company is
unable to enrich shareholders.

4.2.1.7 THE DIVIDEND POLICY WEAKENS THE NEGATIVE INFLUENCE OF

THE FREE CASH FLOW ON STOCK RETURNS
The results of the analysis prove that dividend policy is not able to act as a
moderator in the effect of free cash flow on stock returns. That is, that the existence of
dividend policy does not have a role in the influence of Free Cash Flow on company
value. In other words, the existence of a dividend policy cannot strengthen the effect of
free cash flow on stock returns. The company utilizes free cash flow to maintain its
capital adequacy so that at any time the company has investment opportunities that
benefit the company can use the funds available within the company.

4.2.1.8 THE DIVIDEND POLICY STRENGTHENS THE POSITIVE INFLUENCE

OF CORPORATE GOVERNANCE ON STOCK RETURNS
The results of the analysis prove that dividend policy is not able to act as a
moderator in the influence of corporate governance on stock returns. That is, that the
existence of dividend policy does not have a role in the influence of Corporate
Governance on the value of the company. This shows that information about the dividend
payment policy does not affect the increase in stock returns. From the results of the
study, it is known that good corporate governance does not affect stock returns. This
shows that the survey conducted by the IICG does not guarantee the return of shares of
companies participating in the survey will increase, but not necessarily reduce the
company's stock returns.

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4.2.1.9 THE DIVIDEND POLICY STRENGTHENS THE POSITIVE INFLUENCE
OF EARNING QUALITY ON STOCK RETURN
The results of the analysis prove that dividend policy is not able to act as a
moderator in the effect of earning quality on stock returns. That is, that the existence of a
dividend policy does not have a role in the influence of Earning Quality on the value of
the company. In other words, the existence of a dividend policy cannot strengthen the
effect of earning quality on stock returns. This shows that information about the dividend
payment policy does not affect the increase in stock returns. Earning quality level is able
to provide a positive signal to investors for stock returns, but dividend policy is not able
to strengthen investor ratings of company shares when there is an increase in the value of
earning quality. Dividend policy is not one of the factors that makes large-size companies
have a higher chance of taking earnings management actions to produce good quality
earnings.

5. CONCLUSION
Based on the results of the analysis and discussion in the previous chapter, the
research conclusions can be obtained as follows; Economic Value Added has a positive
effect on Stock Returns, Free Cash Flow has a negative effect on Stock Return,
Corporate Governance has a positive effect on Stock Returns, Profit Quality does not
have a positive effect on Stock Returns, Dividend Policy has a positive effect on Stock
Returns, Dividend Policy does not strengthen positive influences Economic Value Added
on Stock Returns, the Dividend Policy does not weaken the negative influence of Free
Cash Flow on Stock Returns, the Dividend Policy does not strengthen the positive
influence of Corporate Governance on Stock Returns and the Dividend Policy does not
strengthen the positive influence of Earning Quality on Stock Returns.
This study has several limitations that can be taken into consideration for further
research in order to get better results:
1. Difficulties in determining the sample because the manufacturing companies listed on
the Indonesia Stock Exchange in 2016 do not all have complete financial reports.
2. The characteristics of the company used in indicating the factors that influence stock
returns.
3. The method of measuring corporate governance variables uses the ASEAN Scorecard
so that it can lead to subjectivity in the assessment.

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