The Effect of Business Strategy and Firm Reputation on Financial Performance and Its Implications for Shipping Companies' Stock Returns

Abstract

The purpose of this research is to analyze the impact of business strategy and firm reputation on financial performance and its implication for stock return shipping companies. Important stock return to investors requires improvement through the business strategy, firm reputation, and financial performance. The research used a quantitative method and the data analysis used descriptive statistics and path analysis with the SmartPLS3 application. The total sample is 45 consisting of 9 companies with a 5-year observation period taken by purposive sampling technique and was listed on the Indonesian Stock Exchange between 2015 and 2019. The result of the research shows, that there is a direct impact of business strategy on financial performance, there is no direct impact of firm reputation on financial performance, there is no impact of business strategy on stock return, there is a direct impact of firm reputation on stock return, and there is no direct impact of financial performance on stock return. Companies must be able to implement appropriate business strategies by taking into account their internal and external conditions to improve their financial performance. They also have to consistently maintain and enhance their firm reputation by continuously improving the whole organization's performance so that the capitalization of the stock market will increase as well.