DO STOCK INVESTMENT STRATEGY AFFECT STOCK PRICES? A CASE STUDY OF SHARIAH-COMPLIANT COMPANIES IN MALAYSIA

Abstract

This study aims to analyze how the stock market investment strategy using fundamental analysis affects stock prices. Fundamental analysis is an approach used to assess the intrinsic value of a stock based on the company's fundamental factors, including financial statements. This study utilizes historical stock data from 170 Shariah-compliant publicly listedcompanies on Bursa Malaysia and applies various financial ratios and stock valuation methods, such as net profit margin (NPM), price earnings ratio (PER), current ratio (CR), dividend payout ratio (DPR), earnings per share (EPS) and firm size (FS). The sample consists of 170 Shariah-compliant firms from all sectors except for the financial sector of Bursa Malaysia and 20 years maintained listed as status of Shariah-compliant Firms. This research employs panel data estimation techniques for regression analysis with robust panel data estimation technique for statistical inferences. The results indicate that PER, CR, EPS and FS have a positive effect on the stock price. This result confirms that higher in price earnings ratio, liquidity, earnings per share and firm size can increase stock price. The results also found that that NPM and DPR are negatively significant effect to the stock price of Shariah-compliant companies in Malaysia. This research contributes to the understanding of how fundamental analysis methods can be effectively applied in stock market strategies to influence stock prices. It aims to broaden investors' horizons by helping them identify the best strategies using fundamental analysis to generate profits from stock market investments and contribute to economic growth by strengthening economic conditions. This research is among the few studies examining the impact of stock investment decisions using a fundamental analysis approach on the stock prices of Shariah-compliant listed companies in Malaysia.