The Effect of Institutional Ownership, Financial Leverage, and Liquidity on the Profits Creation

Profits are one measurement of the manager's performance in the capital market. By organizing them, firms can enlarge their business and get recognition from investors as a sustainable one. Preferably, all firms hope this condition to occur. As the parts of the consumer goods industry in Indonesia’s capital market, the-food-and-beverage firms are present to provide the basic needs for so many people. Since the firms still have a big market share, they should have profits. However, based on our observation from 2012 to 2017, firms suffering loss still exist and their number elevates.
This study expects to prove and evaluate the consequence of institutional ownership, financial leverage, and liquidity on profits’ creation. Furthermore, to get the firms as the sample and analyze the variables-related facts, we utilize the simple random sampling method and the pooled-data regression model, respectively. Once testing the proposed hypotheses, this research deduces that institutional ownership and financial leverage, as well as liquidity, hold a positive consequence on firm profits’ creation.