TATO and ROA Influence on Stock Returns: Evidence from the Jakarta Islamic Index
DOI:
https://doi.org/10.32506/joes.v3i1.67Keywords:
TATO, ROA, stock return, Jakarta Islamic Index, Shariah-compliant financeAbstract
This study examines how Total Asset Turnover (TATO) and Return on Assets (ROA) influence stock returns in companies listed on the Jakarta Islamic Index (JII). Within Islamic capital markets, conventional financial ratios are used cautiously, as they must align with Shariah principles. Using a qualitative and conceptual method, the study reviews relevant academic, regulatory, and doctrinal sources to assess the role of these indicators in a Sharia-compliant context. Findings show that ROA consistently correlates positively with stock performance, indicating its robustness as a profitability measure within Islamic frameworks. TATO, by contrast, shows a more variable influence, dependent on industry and asset deployment. The study proposes that these financial indicators must be interpreted through ethical filters to reflect compliance and value-based performance. Implications include the need for Islamic-adjusted financial metrics and enhanced investor education to ensure both profitability and religious conformity in stock evaluation.
Downloads
References
Ajanthan, A. (2013). A nexus between liquidity & profitability: A study of trading companies in Sri Lanka. European Journal of Business and Management, 5(7), 221–237.
AAOIFI. (2015). Shari’ah standards. Accounting and Auditing Organization for Islamic Financial Institutions.
Bodie, Z., Kane, A., & Marcus, A. J. (2014). Investments (10th ed.). McGraw-Hill. (p. 204)
Bowen, G. A. (2009). Document analysis as a qualitative research method. Qualitative Research
Journal, 9(2), 27–40. https://doi.org/10.3316/QRJ0902027
Brigham, E. F., & Houston, J. F. (2016). Fundamentals of financial management (14th ed.). Cengage
Journal of Economicate Studies (JoES) vol. 3 no. 1 – 2019 pp. 22-29 https://doi.org/10.32506/6k4xb17127
Oktasaputra; TATO and ROA Influence on Stock Returns: Evidence from the Jakarta Islamic Index
Learning. (pp. 233, 245)
Braun, V., & Clarke, V. (2006). Using thematic analysis in psychology. Qualitative Research in
Psychology, 3(2), 77–101. https://doi.org/10.1191/1478088706qp063oa
Chapra, M. U. (2000). The future of economics: An Islamic perspective. Islamic Foundation.
Chen, L., Novy-Marx, R., & Zhang, L. (2010). An alternative three-factor model. National Bureau of Economic Research Working Paper Series. https://doi.org/10.2139/ssrn.1418117
Creswell, J. W. (2013). Qualitative inquiry and research design: Choosing among five approaches
(3rd ed.). Sage. (p. 72)
Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The Journal of Finance, 25(2), 383–417. https://doi.org/10.2307/2325486
Fama, E. F., & French, K. R. (1993). Common risk factors in the returns on stocks and bonds. Journal of Financial Economics, 33(1), 3–56. https://doi.org/10.1016/0304-405X(93)90023-5
Fama, E. F., & French, K. R. (2015). A five-factor asset pricing model. Journal of Financial Economics, 116(1), 1–22. https://doi.org/10.1016/j.jfineco.2014.10.010
Haniffa, R., & Hudaib, M. (2007). Exploring the ethical identity of Islamic banks via communication in annual reports. Journal of Business Ethics, 76, 97–116. https://doi.org/10.1007/s10551-006-9272-5
Ibrahim, M. (2015). Relationship between asset turnover and return on asset in selected Nigerian manufacturing companies. International Journal of Accounting and Financial Reporting, 5(1), 161–171. https://doi.org/10.5296/ijafr.v5i1.7505
Kamali, M. H. (2008). Shari’ah law: An introduction. Oneworld Publications. (pp. 220–231)
Nasih, M., Harymawan, I., Paramitasari, D., & Handayani, A. (2018). Carbon emissions, firm size, and financial performance: Evidence from companies listed on the Indonesia Stock Exchange. Sustainability, 11(1), 1–13. https://doi.org/10.3390/su11010179
Rahmawati, R., Suparno, & Susanto, A. (2016). The influence of company characteristics on stock returns of Jakarta Islamic Index. Jurnal Akuntansi Multiparadigma, 7(2), 268–284. https://doi.org/10.18202/jamal.2016.08.7026
Ross, S. A., Westerfield, R. W., & Jaffe, J. (2016). Corporate finance (11th ed.). McGraw-Hill Education. (pp. 121, 252, 255)
Sole, J. (2008). Prospects and challenges for developing Islamic finance in the CIS countries. IMF Working Papers, 08/132. https://doi.org/10.5089/9781451870115.001
Usmani, M. T. (2002). An introduction to Islamic finance. Maktaba Ma'ariful Qur’an. (pp. 132, 142, 175)
World Bank. (2016). Islamic finance: Opportunities, challenges, and policy options. https://openknowledge.worldbank.org/handle/10986/25738
Yin, R. K. (2014). Case study research: Design and methods (5th ed.). Sage. (p. 20)
IFSB. (2015). Guiding principles for Shariah-compliant financial reporting. Islamic Financial Services Board. https://www.ifsb.org
IMF. (2018). Ensuring financial stability in Islamic banking. International Monetary Fund. https://www.imf.org/en/Publications/WP/Issues/2018/04/06
Journal of Economicate Studies (JoES) vol. 3 no. 1 – 2019 pp. 22-29 https://doi.org/10.32506/6k4xb17128 Oktasaputra; TATO and ROA Influence on Stock Returns: Evidence from the Jakarta Islamic Index BPS–Statistics Indonesia. (2018).
Indonesian economic indicators. https://www.bps.go.id Islamic Research and Training Institute. (2018).
Risk management in Islamic financial institutions. https://irti.org/IAI. (2016). Pedoman akuntansi syariah. Ikatan Akuntan Indonesia.
Bank Indonesia. (2017). Financial Stability Review (No. 30). https://www.bi.go.id
Securities Commission Malaysia. (2017). Islamic capital market annual report. https://www.sc.com.my/
Islamic Development Bank. (2017). Islamic financial services industry development report.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2019 Wahyu Oktasaputra
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
