Abstract
This study aims to determine the effect of business diversification on stock prices by mediating company performance, represented by the variable ROE and EPS in a fluctuating coal price situation. The data used are 16 companies engaged in coal mining in Indonesia and listed on the Indonesia Stock Exchange (IDX) from 2012 to 2019. Using two analysis methods: path analysis to examine direct and indirect relationships between variables and different tests to see differences in the performance of companies that diversify and do not diversify. The results showed that coal commodity prices had a significant positive effect on stock prices and indirectly, through ROE and EPS, had a significant positive impact on stock prices. Business diversification directly has a significant negative impact on stock prices and indirectly through EPS positively affects stock prices. Business diversification provides a substantial difference to EPS and does not provide a significant difference to ROE.
Highlights
The use of energy derived from coal is mostly carried out by various sectors, both industrial and non-industrial, because coal is one of the largest sources of energy that can be extracted from the earth
Business diversification and Earning Per Share (EPS) have a direct effect on stock prices. ii
Coal commodity prices through Return On Equity (ROE) and EPS have an indirect effect on stock prices. iii
Summary
The use of energy derived from coal is mostly carried out by various sectors, both industrial and non-industrial, because coal is one of the largest sources of energy that can be extracted from the earth. This coal mining product is in great demand in the world because its energy can be used directly as a fuel that will produce heat. The above makes companies interested in taking economic benefits from the coal mining business, including in Indonesia. Based on the 2020 BP Statistical Review, Indonesia is one of the five major coal producing countries in the world. The distribution of world coal production outside China tends to be even
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