Massive Infrastructure Funds Do Not Necessarily Boost State-Owned Construction Stock Returns

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FORMOSA NEWS

Dinar Rahmatulloh and Anisah Firli from the Faculty of Economics and Business, Telkom University, investigated the influence of government capital expenditure, financial performance, and corporate governance on the stock returns of state-owned construction issuers listed on the Indonesia Stock Exchange (IDX) during the 2015–2024 period. This research is crucial to uncover why massive state infrastructure funding does not always directly correlate with increased profits for investors in the capital market.

The construction sector plays a strategic role in national economic growth through various projects funded by the state budget. However, high capital expenditure allocations often trigger heavy debt burdens, payment delay risks, and initial cash flow pressures for state-owned construction companies. This dynamic creates a gap between macro fiscal support and a cautious stock market response.

This study uses a quantitative approach with panel data regression analysis on financial statements and stock trading data. Through a purposive sampling technique, five major state-owned construction sector companies were selected with a total of 50 observations over a decade.

Based on the analysis results, several main findings were identified:

• The realization of government capital expenditure partially has a negative and significant impact on stock returns, as the market scrutinizes the risks of debt burdens and liquidity pressures from large-scale projects.
• Earnings Per Share (EPS) shows a positive and significant influence, proving that investors heavily respond to real profits per share.
• Debt to Equity Ratio (DER) has a positive and significant effect, indicating that the market views debt as productive expansion capital when managed properly.
• Asset efficiency variables (ROA, TATO), short-term liquidity (Current Ratio), and Good Corporate Governance scores do not show a significant direct influence on short-term stock return movements.

The implications of these findings confirm that market participants in the construction sector are more rational and sensitive to fundamental profitability and funding structures rather than the sheer size of the fiscal budget. Issuer managers are advised to strengthen earnings quality and capital structure, while the government needs to evaluate project payment schemes—such as shifting from a turnkey model to monthly progress payments—to alleviate companies' financial pressures.

Author Profiles

• Dinar Rahmatulloh – Researcher and practitioner in finance and capital markets.
• Anisah Firli – Academic and lecturer at the Faculty of Economics and Business, Telkom University, with deep expertise in corporate finance, business management, and capital market analysis.

Research Source

• Article Title: The Influence of Government Capital Expenditure, Financial Performance, and Good Corporate Governance on Stock Returns (A Study of State-Owned Construction Enterprises Listed on the Indonesia Stock Exchange in the 2015-2024 Period)
• Journal Name: Indonesian Journal of Business Analytics (IJBA), Vol. 6, No. 4, August 2026, pp. 908-927
• DOI: https://doi.org/10.55927/ijba.v6i4.16898