p–ISSN: 2723 - 6609 e-ISSN: 2745-5254

Vol. 5, No. 7 July 2024 http://jist.publikasiindonesia.id/

Jurnal Indonesia Sosial Teknologi, Vol. 5, No. 7, July 2024 3100

Predictive Ability of Managerial Effectiveness and Credit

Risk on Market Performance of Manufacturing Industry

Cry Cinta Putri Anjel

1*

, Hanna Gratia Kambey

2

, Fanny Soewignyo

*Correspondence

Keywords: Managerial

Effectiveness, Market

Performance, RNOA,

Tobin's Q, DER.

Healy, 2013) so companies must increase profitability and ensure their growth to be

competitive in an increasingly competitive market. The main goals of a company are to

obtain maximum revenue, sustainable business, provide goods and services to consumers,

and create jobs. To pursue a sustainable business, companies need to pay attention to

performance indicators that can affect investor perception (Aryasa, Fenisa, Astriana,

Linanda, & Sumaryanti, 2024).

running a company and is a formal effort carried out by the company to evaluate the

based on its management of financing, expenses, revenue, and overall profitability and

can significantly affect its stock price.

necessary to pay attention that financial performance can be a good information signal

for external parties who will become investors. The information signals obtained will

determine the market reaction. Therefore, companies must ensure good financial

performance because it can affect market performance (Aifuwa, 2020), and can

significantly affect its stock price. Financial ratios can be used to measure and analyze a

company's financial performance and predict the likelihood of bankruptcy.

abilities help companies achieve their goals by improving credit ratings, access to

financing, and overall company performance. High managerial skills make it easy to

identify threats, opportunities, and competitive advantages that ultimately have a positive

impact on the Company's performance. Furthermore, (Annisa & and Asyik, 2019) stated

that managers have a crucial role in shaping and supervising company policies so that

their influence on financial performance becomes a very relevant and significant aspect.

Ting further added that effective management practices are essential for the success of an

organization and are often tailored to specific circumstances. Parameters such as company

results, organizational environment, employee development, satisfaction, and financial

indicators are commonly used to assess management's effectiveness in driving company

relevant in determining the stock price, the operating activities in question are all the

activities necessary to bring the company's products or services to the market and to serve

the needs of its customers. Operational activities are very important, and companies must

carry them out effectively and efficiently to survive for a long time to ensure the

sustainability of the company. Therefore, this study uses companies operating in the non-

cyclical consumer sector according to the classification of the Indonesia Stock Exchange

(IDX).

Cry Cinta Putri Anjel, Hanna Gratia Kambey, Fanny Soewignyo

goods and services is not affected by economic growth because their products are needed

by consumers' daily needs (Dwicahyani et al., 2022). This sector is less dependent on

changes in the economic and business cycle, where non-cyclical companies produce or

distribute goods and services that are always needed so that their financial performance

is relatively stable and not affected by fluctuations in economic activity (Dwicahyani et

al., 2022; Ridhasyah, 2023; Zanubah et al., 2023). That is why this sector is often the

focus of profitability analysis because it offers stability in financial performance,

especially during periods of economic uncertainty (Dwicahyani et al., 2022; Ridhasyah,

2023). In the context of profitability analysis, non-cyclical consumer goods

manufacturing companies tend to show reliable performance consistency in investment

including investment decisions (Subramanyam, 2014).

the results of observations by stock movement observers (Investasi.com, 2022),

especially in the non-cyclical sector in 2018-2022 which shows stable stock prices and

their resilience to economic fluctuations in that period. This phenomenon has attracted

the attention of researchers in this sector to find out how effectively managers can predict

market performance. Such as (Ng & Daromes, 2016) stated that managerial effectiveness

plays a crucial role in determining how a company performs in the market and directing

the company towards sustainable success through appropriate decision-making, effective

financial management with due regard to financial risks, and rapid adaptation to market

debt than equity.

predicting the market performance of the consumer goods sector in the period before and

during the COVID-19 pandemic by focusing on managerial effectiveness measured using

RNOA and market performance using Tobin's Q measurement. The market will assess

the managerial performance of the company. Thus, this study provides insight into how

a company's managerial performance can be reflected in the market response for the

can show the effectiveness of debt for the company's expansion and growth (Hulu, Nazmi,

& Saragih, 2023). Previous research stated that DER hurt the value of Tobin's Q because

investors rated a high DER as something bad for investors (Muliana & Ikhsani, 2019),

while other studies conducted by Dwiastuti and Dillak (2019) and research conducted by

Devianasari and Suryantini (2015) found different results, namely DER had a positive

effect on the value of Tobin's Q, where the DER value of a company can affect how

investors value the company. The signalling theory, explains that managers can use debt

as a source of funding that provides more reliable information to investors because

companies that increase debt are seen as companies that are confident in the company

prospects. Based on the relevant literature, the researcher formulated the second

Exchange (IDX) with a total of 129 companies in 2023. The criteria for selecting the

sample used purposive sampling where the companies being studied were those that were

consistently registered, and published annual reports during the observation year, namely

2018 to 2022 and data that had negative profit and negative equity values were excluded

from observation so that the number of company samples obtained was 38 companies

with a total of 190 data.

Classical Assumption Test

multicollinearity and heteroscedasticity. The normality test was not carried out in this

study because the data in the study exceeded 30 data, which amounted to 190 data. The

Cry Cinta Putri Anjel, Hanna Gratia Kambey, Fanny Soewignyo

𝑅𝑁𝑂𝐴 =

𝑁𝑒𝑡 𝑜𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝑝𝑟𝑜𝑓𝑖𝑡 𝑎𝑓𝑡𝑒𝑟 𝑡𝑎𝑥 (𝑁𝑂𝑃𝐴𝑇)

net operating assets (NOA). NOPAT is net income after tax, without considering the

company's capital structure, i.e. debt and equity. Meanwhile, NOA is an operating asset

consisting of total assets minus invested financial assets. So in data collection, the

invested assets are not taken into account.

Cry Cinta Putri Anjel, Hanna Gratia Kambey, Fanny Soewignyo

in the Tobin's Q value of non-cyclical sector companies listed on the IDX can be

explained by the RNOA and DER variables. While the remaining 11.98% was influenced

by other variables outside the study.

Pengaruh RNOA (Return on Net Operating Asset) terhadap Tobin's Q

found that the RNOA variable had a negative and significant effect on Tobin's Q (β = -

.484, ρ = .000). Thus, Ha1 is accepted. This result indicates that the higher the RNOA

value, the lower the Tobin's Q value. This is not in line with the research conducted by

Rahman and Sunarto (2019) which stated that a high RNOA is positively correlated with

the value of Tobin's Q. a good company.

(Veronica & Pebriani, 2020) stock market performance is also influenced by external

factors seen from a fundamental and macroeconomic perspective, not only influenced by

the company's internal ability to manage risk and generate profits. This significant

negative influence can also be caused by the evaluation by investors of the DER value

indicated in the descriptive results with a maximum value of up to 3.56 and an average of

0.92. In addition, this result can also be caused because this study includes the COVID-

19 period, namely 2020 to 2023 based on official information from the Cabinet Secretariat

of the Republic of Indonesia (2023), which has an impact on the company's market

performance.

Effect of DER (Debt to Equity Ratio) on Tobin's Q

the investor's perception that when the company uses debt, the company is trusted by

investors. Investors assess the existence of creditor confidence in this sector by providing

a relatively large amount of credit, which is certainly a big risk. The level of creditor trust

by providing large credit has an impact on the level of investor confidence.

(2019) and Devianasari and Suryantini (2015) that DER has a positive and significant

value on market performance because high debt in a company is not always considered

line with research conducted by Rahman and Sunarto (2019) that DER is a factor that

influences investors' decisions in making investment decisions, a high DER is a negative

signal for investors about the company's financial condition.

management to generate profits from the company's asset capital. Further research may

Cry Cinta Putri Anjel, Hanna Gratia Kambey, Fanny Soewignyo

Inam Bhutta, Aamir, Sheikh, Muhammad Fayyaz, Munir, Aroosa, Naz, Arooj, & Saif,

Muallifin, Ovi Rizki, & Priyadi, Maswar Patuh. (2016). Dampak Pengungkapan

Muliana, Muliana, & Ikhsani, Khilyatin. (2019). Pengaruh Struktur Modal, Pertumbuhan

Subramanyam, K. R. (2014). Financial statement analysis. McGraw-Hill.

Ting, Irene Wei Kiong, Tebourbi, Imen, Lu, Wen Min, & Kweh, Qian Long. (2021). The