Effect Of Intellectual Capital, Capital Structure, Earning Per Share, And Profitability Of Stock Prices With Price Earning Ratio As Moderation Variables In LQ45 Companies On The Indonesia Stock Exchange
Introduction
In the world of investment, especially in the stock market, the measurement of company performance is an important key in decision making. This study aims to explore the effect of several variables, namely intellectual capital, capital structure, earnings per share (EPS), and profitability on stock prices in companies listed in the LQ45 index on the Indonesia Stock Exchange. Interestingly, this research also investigates whether the Price Earning Ratio (PER) can function as a moderation variable that affects the relationship between these variables.
Literature Review
The stock market is a complex system where various factors influence stock prices. Intellectual capital, which includes intangible assets such as human capital, structural capital, and relational capital, has been recognized as a key driver of company performance (Bontis, 1998). Capital structure, which refers to the mix of debt and equity financing, is another important factor that affects stock prices (Modigliani & Miller, 1958). Earnings per share (EPS) and profitability are also critical variables that influence stock prices, as they reflect a company's ability to generate profits (Fama & French, 2002).
Research Methodology
The design of this research uses a causal associative method, with a sample of 34 LQ45 companies listed on the Indonesia Stock Exchange during the 2015 to 2018. Sample selection is carried out by purposive sampling method, which refers to certain criteria to identify relevant companies. The data used are secondary data obtained from company annual reports and other trusted sources. Data analysis was carried out through multiple linear regression analysis and moderation interaction test using EViews software 9.
Results
The results showed that individually, earnings per share and profitability have a positive and significant influence on stock prices. This shows that the higher the company's EPS and profitability, the greater the interest of investors to buy the company's shares, which in turn increases stock prices. On the other hand, Intellectual Capital has a negative and insignificant influence on stock prices, which may indicate that although intellectual assets are important, this value has not been fully reflected in stock prices. The capital structure, which is expected to affect the stock price positively, turns out to show the same results, namely the insignificant positive influence.
Moderation Analysis
There are other interesting findings in this study. Price Earning Ratio is proven to strengthen the relationship between earnings per share and profitability of stock prices. This shows that PER can be a strong indicator for investors to assess the potential of profits that will be obtained from their investment. However, the PER cannot moderate the relationship between intellectual capital and the capital structure to the stock price, indicates that these two variables may operate independently from the per-impact.
Conclusion
Overall, this research shows the importance of analyzing fundamental variables in determining stock prices. For investors, knowing the factors that affect stock prices such as EPS and profitability can help them in making better investment decisions. In addition, this research also provides a clear picture of the challenges faced by the company in the management of intellectual capital and capital structure, as well as how these things can have an impact on the stock market in Indonesia.
Implications
Information obtained from this study not only offers insights for individual investors but also for company managers in formulating appropriate strategies to improve company performance and stock market attractiveness. This research highlights the need for companies to focus on developing their intellectual capital and improving their capital structure to increase their stock prices. Additionally, this study suggests that investors should consider the PER as a key indicator in assessing the potential of profits from their investment.
Limitations
This study has several limitations. Firstly, the sample size is relatively small, which may limit the generalizability of the findings. Secondly, the data used are secondary data, which may be subject to errors or biases. Finally, the study only focuses on the LQ45 companies listed on the Indonesia Stock Exchange, which may not be representative of all companies listed on the exchange.
Future Research Directions
Future research can build on this study by exploring other factors that influence stock prices, such as market sentiment and economic conditions. Additionally, researchers can investigate the impact of intellectual capital and capital structure on company performance in other industries or countries. Furthermore, this study can be replicated using a larger sample size and more recent data to provide a more comprehensive understanding of the relationship between intellectual capital, capital structure, EPS, profitability, and stock prices.
References
Bontis, N. (1998). Intellectual capital: An exploratory study that develops measures and models. Management Decision, 36(2), 63-76.
Fama, E. F., & French, K. R. (2002). Testing the Fama-French three-factor model. Journal of Financial Economics, 63(3), 385-419.
Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance, and the theory of investment. American Economic Review, 48(3), 261-297.
Q: What is the main objective of this study?
A: The main objective of this study is to explore the effect of several variables, namely intellectual capital, capital structure, earnings per share (EPS), and profitability on stock prices in companies listed in the LQ45 index on the Indonesia Stock Exchange.
Q: What is the significance of this study?
A: This study is significant because it provides insights into the factors that affect stock prices, which is crucial for investors and company managers in making informed decisions. Additionally, this study highlights the importance of intellectual capital and capital structure in determining company performance.
Q: What is the sample size of this study?
A: The sample size of this study is 34 LQ45 companies listed on the Indonesia Stock Exchange during the 2015 to 2018.
Q: What is the data analysis method used in this study?
A: The data analysis method used in this study is multiple linear regression analysis and moderation interaction test using EViews software 9.
Q: What is the finding of this study regarding the relationship between intellectual capital and stock prices?
A: The finding of this study is that intellectual capital has a negative and insignificant influence on stock prices, which may indicate that although intellectual assets are important, this value has not been fully reflected in stock prices.
Q: What is the finding of this study regarding the relationship between capital structure and stock prices?
A: The finding of this study is that capital structure has an insignificant positive influence on stock prices, which may indicate that the capital structure of companies listed in the LQ45 index is not a significant factor in determining stock prices.
Q: What is the finding of this study regarding the relationship between earnings per share (EPS) and stock prices?
A: The finding of this study is that EPS has a positive and significant influence on stock prices, which means that the higher the EPS, the greater the interest of investors to buy the company's shares, which in turn increases stock prices.
Q: What is the finding of this study regarding the relationship between profitability and stock prices?
A: The finding of this study is that profitability has a positive and significant influence on stock prices, which means that the higher the profitability, the greater the interest of investors to buy the company's shares, which in turn increases stock prices.
Q: What is the finding of this study regarding the moderating effect of Price Earning Ratio (PER) on the relationship between earnings per share (EPS) and profitability and stock prices?
A: The finding of this study is that PER strengthens the relationship between EPS and profitability and stock prices, which means that PER can be a strong indicator for investors to assess the potential of profits that will be obtained from their investment.
Q: What are the implications of this study for investors and company managers?
A: The implications of this study are that investors should consider the EPS and profitability of companies listed in the LQ45 index when making investment decisions, and company managers should focus on developing their intellectual capital and improving their capital structure to increase their stock prices.
Q: What are the limitations of this study?
A: The limitations of this study are that the sample size is relatively small, the data used are secondary data, and the study only focuses on the LQ45 companies listed on the Indonesia Stock Exchange.
Q: What are the future research directions based on this study?
A: The future research directions based on this study are to explore other factors that influence stock prices, such as market sentiment and economic conditions, and to investigate the impact of intellectual capital and capital structure on company performance in other industries or countries.