The Influence of Fundamental Analysis on Stock Prices: The Case of Food and Beverage Industries

Abstract

The objective of this study is to determine the effect of fundamental factors, like Debt to Equity Ratio (DER), Return on Assets (ROA), Current Ratio (CR), Price Earnings Ratio (PER), and Total Assets Turnover (TATO), towards stock prices. The object of this research is the food and beverage industries listed on the Indonesia Stock Exchange in the period 2012 - 2015. The study used secondary data obtained from the Indonesia Stock Exchange website (www.idx.co.id). The research design used is causal research methods and the sampling technique used is purposive sampling method. There were 11 out of 17 companies that met the criteria during the four-year observation period. The data was analyzed by panel data regression analysis technique using three approaches - Common Effect, Fixed Effect, and Random Effect. Chow test model, Hausman test, and Lagrange Multiplier test were used for the model selection using F test and t-statistical tesst. The result of the study through the use of F tests indicated that the increase or decrease of stock prices are affected by ROA, CR, DER, TATO and PER. The result of the t-statistic test showed that ROA and TATO have a partial influence on the share price, whereas the DER, CR and PER variables have no affect on the stock price of food and beverage companies.