How is Geographical Diversification, Mortgage Rate, and GDP Growth Affect Indonesian Property Companies’ Performance Measured by Tobin’s Q with Company Size as the Moderator?

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William, Kelvin (2025) How is Geographical Diversification, Mortgage Rate, and GDP Growth Affect Indonesian Property Companies’ Performance Measured by Tobin’s Q with Company Size as the Moderator? Undergraduate thesis, institute ipmi.

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Abstract

The purpose of this study is to examine the relationship between geographical diversification, mortgage rate, GDP growth and the moderating effect of firm size on Indonesian property companies’ performance measured by Tobin’s Q. This study tries to fill the gap in the body of current literature concerning the study context of geographical diversification in property industry and Indonesia as it hasn’t received much attention. With a particular focus on the impact of the moderating effect of company size that is often used as a control variable in similar studies. This study examines eight property companies listed on the Indonesia Stock Exchange with the data collection range from 2010 – 2022. Then it was processed with a quantitative research approach and panel data analysis with a total of 104 observations. The Hausman and Lagrange Multiplier test result suggests using the Random-Effect Model (REM) for the parameter estimation. This study discovered that Tobin’s Q was only determined negatively by mortgage rate and positively by the moderating effect on mortgage rate suggesting that mortgage rate heavily influences the price of property. Other than that, geographical diversification is found to be insignificant toward Tobin’s Q suggesting that companies that diversify may lack value added to the company but reduce risk as explained by Modern Portfolio Theory. GDP growth was also found to be insignificant toward Tobin’s Q suggesting that stock performance reflects the information of GDP growth as explained by the Efficient Market Hypothesis. While the moderating effect of firm size on geographical diversification and GDP growth variables’ effect toward Tobin’s Q were empirically found to be insignificant. Suggesting that regardless of size, the company couldn’t take the benefit of geographical diversification and GDP growth toward Tobin’s Q. Therefore, to mitigate geographic risks, businesses should aim for geographic diversification and develop strategies for fluctuating mortgage rates. Investors must closely examine how companies handle diversification and mortgage rates. Government action is critical in regulating policies impacting mortgage rates and attract investment creating balanced regional development to enhance diversification and reduce economic disparities.

Item Type: Thesis (Undergraduate)
Subjects: H Social Sciences > H Social Sciences (General)
Divisions: Thesis > Bachelor of Business Administration
Depositing User: sandra margaretha
Date Deposited: 27 Feb 2025 03:33
Last Modified: 27 Feb 2025 03:33
URI: http://repository.ipmi.ac.id/id/eprint/2690

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