Institusion
STIE Indonesia Banking School
Author
Larasati, Dwi Atika Putri
Subject
HF5601 Accounting
Datestamp
2024-07-17 01:49:33
Abstract :
Before investing in stock, an investor should ensure that the investment is right. It can be done by using fundamental analysis to examine management performance. Management performance can be examined by its profit. The higher company?s profit, the higher dividend for investor. It impacts to the increasing of stock price changes.
Profitability ratio is an indicator to show ability of company in creating profit. The objective of this research is to examine the effect of Return on Equity (ROE) and Operating Income Return on Investment (OIROI) to stock price changes
The sample comprised 8 companies in mining industry listed on Indonesian Stock Exchange for the period 2003-2007 and 11 companies in infrastructure, utility, and transportation industry listed on Indonesian Stock Exchange for the period 2003-2007
Based on F-test, Return on Equity and Operating Income Return on Investment significantly impacted on stock price changes both on the two industries. Based on t-test, partially, Return on Equity significantly impacted on stock price changes both on the two industries. However, Operating Income Return on Investment shows the opposite condition that it did not significantly impacted on stock price changes on the two industries
This research is hopefully beneficial for companies in making a wisdom relating to ROE and OIROI and can give additional knowledge and information for parties who need reference about profitability ratio.
Keywords : Return on Equity, Operating Income Return on Investment, stock price changes.