Analyzing accounting ratios as determinants of the LQ45 stock prices in Jakarta Stock Exchange during the period 2002-2006

• Main Author: Toly, Agus Arianto
• Format: text
• Language: English
• Published: Animo Repository 2008
• Subjects: Stock exchanges; Stocks—Prices; Earnings per share; Dividends; Jakarta Stock Exchange; Accounting
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/3777; https://animorepository.dlsu.edu.ph/cgi/viewcontent.cgi?article=10615&context=etd_masteral
• Institution: De La Salle University

The lack of studies regarding the determinants of stock price movement in the Jakarta Stock Exchange (JSE), one of the emerging stock exchanges in the South East Asia, and the pursue of generalization became the reasons why this study was conducted. Previous researchers in the particular research object (Gupta, Chevalier, & Sayekt, 2000; Subiyantoro & Andreani, 2003), focused more on the external factors of the firms rather than the internal ones. This study preferred the accounting ratios as the determinants of the stock price. The scope of this study was limited on the most highly-capitalized stocks classified as the LQ45 in the JSE during the period 2002-2006. The evidence from such kind of blue chip stocks hopefully could explain the general movement of the stock price in the JSE. The panel data regression model was used to test whether all the independent variables involved in the equation could simultaneously explain the behavior of the dependent variable. Such developed model was analyzed by the utilization of econometrics package, namely GRETL 1.7.4. After running some statistical treatments on the developed model, this study revealed that the shareholder ratios consisted of book value per share, dividend payout ratio, EPS, and ROA became the accounting ratios that could determine the movement of the stock price of the LQ45 in the JSE during the period 2002-2006. Keywords: book value per share, current ratio, dividend payout ratio, earnings per share (EPS), fundamental analysis, LQ-45, return on assets (ROA), stock dividends, and technical analysis.