The Mediation Effect of Price to Book Value on Financial Ratio to Stock Return

Almuzayyad, Almuzayyad and Guntur Kusuma Wardana, Guntur Kusuma Wardana ORCID: https://orcid.org/0000-0001-7901-1228 (2026) The Mediation Effect of Price to Book Value on Financial Ratio to Stock Return. LAA MAISYIR: Jurnal Ekonomi Islam, 7 (1). pp. 194-212. ISSN 2580-9512

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Abstract

Stock returns are an essential indicator for investors in assessing the performance of Islamic financial institutions listed on the Indonesia Stock Exchange (IDX). This study examines the effect of Return on Assets (ROA), Debt to Equity Ratio (DER), Current Ratio (CR), Total Asset Turnover (TATO), and Earnings Per Share (EPS) on stock returns, with Price to Book Value (PBV) as a mediating variable. Employing a quantitative approach, this study applies panel data regression and Sobel mediation testing to quarterly data from 9 Islamic financial institutions selected through purposive sampling from a population of 59 firms over the 2020–2024 post-pandemic period. The results indicate that PBV does not mediate the relationship between financial ratios and stock returns. However, DER, CR, TATO, and EPS have a significant direct effect on stock returns, while ROA does not show a significant influence. These findings support signaling theory, indicating that investors in Islamic capital markets place greater emphasis on leverage, liquidity, operational efficiency, and earnings performance. The study contributes to the Islamic finance literature by providing post-pandemic empirical evidence and offers practical implications for investors and management in enhancing stock performance.

Item Type:	Journal Article
Keywords:	stock returns; Islamic financial institutions; financial ratios; price to book value; signaling theory
Subjects:	15 COMMERCE, MANAGEMENT, TOURISM AND SERVICES > 1502 Banking, Finance and Investment > 150201 Finance
Divisions:	Faculty of Economics > Department of Islamic Banking
Depositing User:	Guntur Kusuma Wardana
Date Deposited:	10 Jul 2026 15:43

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