THE INFLUENCE OF LEVERAGE, TANGIBILITY, AND LIQUIDITY ON THE PERFORMANCE OF INSURANCE COMPANIES LISTED IN THE INDONESIA STOCK EXCHANGE (IDX) FROM 2010 – 2014

Abstract

Most people will use insurance to mitigate risks. In Indonesia, only 12% of Indonesian owns insurance. While the Indonesian monthly expenditures for insurance for tax and insurance are increasing, the number of insurance companies is decreasing. Therefore, this research aims to find the specific factors that influence the performance of insurance companies. This research is quantitative research method by using secondary data taken from 2011-2014 from 8 insurance companies which listed in Indonesia Stock Exchange (IDX). Based on previous researches, to find out the factors that influence performance of insurance companies, the researcher has decided on leverage, tangibility, and liquidity, as independent variables, while the dependent variable is return on assets (ROA). This research uses Eviews9 as the statistical tool to process the raw data and hypotheses testing. The method used to test the whether the variables have positive or negative effect is the multiple regression analysis. The result shows that liquidity has a significant impact on return on assets, while leverage and tangibility do not have a significant impact on return on assets. Liquidity has a significant impact because only liquidity that could increase the total assets rapidly. Leverage, tangibility, and liquidity are simultaneously influence the return on assets, means that those variables are factors that influence the insurance companies’ performance in terms of ROA.