Financial Signals and Foreign Ownership: Evidence from LQ45 Companies on the Indonesia Stock Exchange

Abstract

This study aims to examine the effect of Return on Equity (ROE), Debt to Equity Ratio (DER), and Earnings per Share (EPS) on foreign ownership. The population of this study comprises companies included in the LQ45 index listed on the Indonesia Stock Exchange during the period 2022–2024. A quantitative research approach is employed, using purposive sampling to determine the study sample. From an initial population of 45 companies, 28 firms met the sampling criteria, resulting in 84 firm-year observations. Multiple linear regression analysis is applied to test the proposed hypotheses, with data processed using SPSS version 25. The empirical results indicate that Return on Equity and Earnings per Share have a significant effect on foreign ownership, while the Debt to Equity Ratio does not have a significant effect. These findings suggest that foreign investors in LQ45 companies tend to place greater emphasis on profitability and earnings performance rather than capital structure when making investment decisions.