The Effect of NPM and EPS Profitability Signals on Stock Return in the Post-Pandemic Pharmaceutical Sector

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Authors

  • Faiz Said Bachmid Department of Accounting, Faculty of Economics, Management, Business, and Accounting, Universitas Ekuitas Indonesia, Bandung, Indonesia

DOI:

https://doi.org/10.52250/reas.v6i1.1015

Keywords:

earnings per share, pharmaceutical industry, profitability signals, signaling theory, stock return

Abstract

Introduction/Main Objectives: This study examines the effect of profitability signals, namely Net Profit Margin (NPM) as a measure of operational efficiency and Earnings per Share (EPS) as an indicator of shareholder value, on stock returns in Indonesia’s pharmaceutical sector during the post-pandemic period (2021–2023). The study aims to identify how investors respond to profitability information under changing market conditions. Background Problems: Previous studies have reported inconsistent findings regarding the effects of NPM and EPS on stock returns. This study investigates whether investors prioritize operational performance or direct financial value signals during a period of industry transition and uncertainty. Novelty: This research extends signaling theory by examining investor behavior during post-pandemic market disruption, reducing cross-industry variation through a homogeneous sector sample, and proposing an empirical framework for investor signal prioritization. Research. Methods: A quantitative ex post facto approach was employed using panel data from seven listed pharmaceutical companies, resulting in 21 firm-year observations selected through purposive sampling. Data were analyzed using a Fixed Effect Model panel regression based on audited financial statements and year-end stock prices. Finding/Results: The results show that EPS has a significant positive effect on stock returns (p < 0.01), while NPM has no significant effect (p > 0.05). Together, both variables significantly influence stock returns with an Adjusted R² of 0.571. ,Conclusion: The findings support signaling theory and indicate that investors prioritize direct value-related indicators over operational efficiency measures.

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Published

2026-06-29

How to Cite

Said Bachmid, F. (2026). The Effect of NPM and EPS Profitability Signals on Stock Return in the Post-Pandemic Pharmaceutical Sector. Review of Accounting and Business, 6(1), 1–19. https://doi.org/10.52250/reas.v6i1.1015

Issue

Vol. 6 No. 1 (2026): Review of Accounting and Business (on progress)

Section

Articles

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Copyright (c) 2026 Faiz Said Bachmid

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