Influence of Liquidity, Profitability, and Solvency of Companies on Bond Ratings (Case Study: Companies Listed on the Indonesia Stock Exchange 2018-2020)

Abstract

The purpose of this study was to examine the relationship between liquidity, profitability and solvency on bond ratings. This research focuses on companies in the Property, Real Estate, and Construction sectors listed on the Indonesia Stock Exchange for the 2018-2020 period and using the Credit Rating Agency as a bond rating agency. Bond rating data is taken from the official website of the Credit Rating Agency and financial reports from the official website of the Indonesia Stock Exchange. The test in this study uses descriptive statistical analysis to provide certainty that the regression equation obtained has accuracy. This study uses a hypothesis test to see the effect of liquidity, profitability, and solvency on bond ratings. Hypothesis testing uses the individual parameter significant test method and the simultaneous significance test. The test was carried out using the multiple linear regression method with panel data during the test period. The results of this study prove that profitability has a significant effect, while liquidity and solvency have no significant effect on bond ratings.