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The Influence of Fundamental Factors on Stock Price
Research to Mining Companies Listed on The Indonesia Stock Exchange
Pamella Pamella, Yayat Supriyatna and Leni Yuliyanti
Fakultas Pendidikan Ekonomi dan Bisnis, Universitas Pendidikan Indonesia, Bandung, Indonesia
{pamellabungakasih, yatsuprh29, yuliyanti.leni)@gmail.com
Keywords: Fundamental Factors, Profitability, Liquidity, Leverage, Activity, Stock Price.
Abstract: This paper aims to prove the influence fundamental factors that consist of profitability, liquidity, leverage and
activity to towards the stock price at mining companies listed on Indonesia Stock Exchange in 2013-2015.
Profitability was measured by Return on Asset (ROA), liquidity was measured by Current Ratio (CR),
leverage was measured by Debt to Equity Ratio (DER) and activity was measured by Total Asset Turnover
(TATO). This research used descriptive study with verification method and documentation technique for
collecting data. This research also used secondary data which financial report and annual report from mining
companies in 2013-2015. The technique for collecting sample is based on purposive sampling to get 24
companies in three years from 2013 to 2015 with 72 observation data. The statistic analysis is used panel data
regression. The conclution of this research is in a simultaneously fundamental factors that consist of
profitability, liquidity, leverage and activity have a significant effect on stock price. In partially profitability
and activity has positive significant effect on stock price, liquidity hasnt positive significant effect on stock
price and leverage has negative significant effect on stock price.
1 INTRODUCTION of oil from Saudi Arabia and Iran. The decline in
crude oil prices to the lowest level is the first time has
Capital market is a means of obtaining the funds used happened since the global financial crisis in 2008,
finance in investment with a mechanism for which then led to high inflation and soaring oil prices
collecting funds from public and circulate the funds accompanied by rising prices of subsidized fuel.
back into the productive sectors. Capital markets also World oil prices are under pressure because of the
have an important role to national development and abundance of global oil supplies by the number
especially for the development of business, as an continues to increase.
alternative source of external financing by the If the decline in stock price the mining sector
company. allowed to continue, then will impact on the loss that
The alternative investments in the capital market would be suffered by investors and the company,
that has been chosen by the investors is a shares because with this condition investors will assume that
because shares can give them big profits. According the performance of mining companies has declined,
to Hanafi (2012: 124), "Share is a proof of so investors will change his mind to invest and find
ownership." Shares can be interpreted as a sign of another company that can provide more benefits.
ownership an individual or business entity in an There are several approaches that can be used to
enterprise, especially publicly traded companies who assess the price of a stock. Husnan (2009: 307) argues
trade shares on the capital market. that "To perform the analysis and stock picking, there
An investor must beunderstand about stock prices are two basic approaches, namely technical analysis
and analysis of it first because the movement of stock and fundamental analysis." Then Fischer and Jordan
prices cant be predicted certainty. The share of price (2005: 304) argues that "Fundamental factors are
is value of a stock that reflects wealth of company and factors that give information about the performance
the movement of stock prices will be directly of companies such as: the ability of management,
proportional with company performance. business prospects, the outlook for marketing and
During 2015, decrease in crude oil prices due to other factors that influence such as socio-economic
slow energy demand from China as well as the supply
540
Pamella, P., Supriyatna, Y. and Yuliyanti, L.
TheInfluence of Fundamental Factors on Stock Price - Research to Mining Companies Listed on The Indonesia Stock Exchange.
In Proceedings of the 2nd International Conference on Economic Education and Entrepreneurship (ICEEE 2017), pages 540-548
ISBN: 978-989-758-308-7
Copyright © 2017 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved
TheInfluenceofFundamentalFactors on Stock Price - Research to Mining Companies Listed on The Indonesia Stock Exchange
conditions, political, security, government appropriate time determined by the behavior of the
regulations and policies. " market and is also determined by demand and supply
Thus we can conclude that the fundamental factor of the relevant shares in the capital market". While
used to analyze the information provided by the Rusdin (2006: 73) defines that, "The stock price is the
company, and is directly related to the performance price of a stock when the market is in progress."
of the company as well as provide an overview of It can be concluded that the share price is the price
management achievements in terms of management of a stock that occurred in the capital market and is
of the company. This study focuses on the micro determined by the demand and the offer. Then the
approach that approaches that analyze companies stock price becomes a sign of a person or entity
based on financial ratio analysis. ownership in a company.
Signalling theory emphasizes that the information
that have relevance to the company becoming a 2.3 Factors Affecting on the Stock
necessity for investors and businessmen. One of Price
information that can help investors and businessmen
in the decision that the information contained in the Arifin (2007: 116) states that the fluctuating factors
financial statements. Fundamental factors focuses on on stock prices, namely:
key data in the financial statements to take into Fundamental conditions Issuer
account whether the stock price accurately been Law of Demand and Supply
appreciated or not. Interest Rate (SBI)
Thus, the fundamental factor is one way to assess Foreign exchange
the stock through the observation of various Foreign Funds in Stock
indicators related to the economic conditions of a Stock Price Index (CSPI)
company so this research will focus on the analysis of News and Rumors
companies using financial ratios as a measure of the While Fahmi and Lavianti (2009: 72) states that
company's performance to be examined. there are some conditions and situations that can
In this context, this paper aims to prove the result in fluctuating stocks, namely:
influence fundamental factors that consist of Micro and macro economic conditions
profitability, liquidity, leverage and activity to The company's policy in deciding to expand
towards the stock price at mining companies listed on (expansion)
Indonesia Stock Exchange in 2013-2015. Substitution of directors suddenly
Their directors or commissioners of the
companies involved in a crime and the case has
2 LITERATURE REVIEW been entered into the court
A company's performance is steadily declining
2.1 Stock in every time
Systematic risk, which is a form of risk that
Fahmi (2012: 81) defines, "Stocks are paper proof of occurs as a whole and has contributed to the
ownership participation capital / funds at a company company involved
that is clearly stated nominal value, and the company The effect of market psychology has reduced the
name followed by clear rights and obligations to each share purchase technical conditions
holder". Meanwhile, according Rusdin (2006: 68) It can be concluded that an investor must be able
shares is "The certificate showing proof of ownership to read the situation and market conditions so that
of a company, and shareholders have the right to investment activities can be run well then investors
claim or income from the assets of the company." should be able to anticipate the various possibilities
It can be concluded that the stocks are securities that occur to observe the situation and the market
that show ownership of the company so that conditions.
shareholders have the right to claim on dividends or
other distributions by the company to its 2.4 Fundamental Analysis
shareholders.
2.2 Stock Price Husnan (2009: 315) states that "The fundamental
analysis tries to predict stock prices in the future by
estimating the value of the fundamental factors that
Hartono (2010: 8) defines, "The share price is the affect stock prices and establish the relationship of
price that occurred in the stock market at the these variables in order to obtain the estimated price
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ICEEE2017-2ndInternational Conference on Economic Education and Entrepreneurship
of the stock." While Liembono (2015: 1) states 2.4.4 Profitability Ratio
"basically, fundamental analysis aims to look at the
performance of a company and assess whether the This ratio describes the company's ability to generate
price of its shares on the stock exchange in profits. One indicator that can be used to measure
accordance with the fundamental financial condition profitability is Return on Assets (ROA).
of the company. In fundamental analysis of a
company, which is seen is the company's financial
statements. " 3 METHODS
Therefore through fundamental analysis, the
expected potential investors will know how the The research design used in this research is
company's operations one through the financial descriptive and verification. Descriptive method used
statements of the company for the value of a stock is
strongly influenced by the performance of the in this study to describe and explain an overview of
company concerned. the fundamental factors that consisted of profitability,
Husnan and Pudjiastuti (2006: 137), states liquidity, leverage and activity in the mining sector
"Stages in conducting fundamental analysis consists companies listed on the Stock Exchange in 2013-
of (1) calculate the macroeconomic conditions or the 2015. While the verification method used in this study
overall market conditions, (2) calculate the overall to test the effect of the fundamental factors that
industry conditions, and (3) calculate the specific consisted of profitability, liquidity, leverage and
conditions of the company." activity to the stock price on mining companies listed
Therefore, fundamental analysis is an analytical on the Stock Exchange in 2013-2015.
study of the economic, industrial and condition of the The independent variable of this research is a
company. Then fundamental analysis is oriented key fundamental factor consisting of profitability,
data in the financial report and closely related to the liquidity, leverage and activity. While the dependent
company's financial condition is described through variable is the stock price. The population in this
the company's financial performance. research that mining companies listed on the Stock
Hery (2015: 166) states that the types of financial Exchange in 2013-2015. The population in this study
ratios commonly used to assess the financial is the mining sector companies listed on the Indonesia
condition and performance of the company, among Stock Exchange and companies engaged in the
others: mining sector amounted to 44 companies. Sampling
2.4.1 Liquidity Ratio technique used is purposive sampling with certain
criteria in order to take a sample of 24 companies as
This ratio describes the company's ability to meet its follows.
short term obligations immediately due. One Table 1: Sample company.
indicator that can be used to measure the liquidity is No. Company name
the Current Ratio (CR).
2.4.2 Leverage Ratio 1 PT. Adaro Energy Tbk
2 PT. Atlas Resources Tbk
This ratio describes the company's ability to meet all 3 PT. ATPK Resources, Tbk
obligations. One indicator that can be used to measure 4 PT. Baramulti Suksessarana, Tbk
the leverage is Debt to Equity Ratio (DER).
5 PT. Golden Energy Mines Tbk
2.4.3 Activity Ratio 6 PT. Harum Energy Tbk
This ratio is used to measure the efficiency of the 7 PT. Resource Alam Indonesia Tbk
utilization of the resources owned by the company, or 8 PT. Samindo Resources, Tbk
to assess the company's ability to run the company's 9 PT. Perdana Karya Perkasa Tbk
daily activities. One indicator that can be used to
measure the activity is the Total Asset Turnover 10 PT. Petrosea Tbk
(TATO). 11 PT. Toba Bara Sejahtera Tbk
12 PT. Ratu Prabu Energy Tbk
13 PT. Benakat Petroleum Energy Tbk
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TheInfluenceofFundamentalFactors on Stock Price - Research to Mining Companies Listed on The Indonesia Stock Exchange
14 PT. Elnusa Tbk Yit = β0 + β1Xit + β2Xit + β3Xit + β4Xit + eit
15 PT. Surya Esa Perkasa Tbk The formulation of the panel data regression in
16 PT. Medco Energi Internasional, Tbk this study are as follows:
17 PT. Interinsco Radiant Utama Tbk HSit = β0 + β1ROAit + β2CRit + β3DERit + β4TATOit + eit
18 PT. Aneka Tambang (Persero), Tbk
19 PT. Cita Mineral Investindo, Tbk 3.3 Panel Data Estimation Techniques
20 PT. Vale Indonesia Tbk
21 PT. J Asia Pacific Resources, Tbk According Rohmana (2013: 232) panel data
22 PT. SMR Utama Tbk estimation techniques can use models with PLS
model (common effect), the fixed effect model,
23 PT. Timah (Persero) Tbk random effect models. The discussion of test that will
24 PT. Mitra Investindo, Tbk be used to obtain the right model in estimating panel
data regression is as follows:
Research will be conducted on 24 samples of the 3.3.1 Significance Tests Fixed Effect through
company's financial statements for the three-year the F test statistics
study period, namely from the years 2013-2015 so
that the data observed in this study amounted to 72 The formulation of the hypothesis in statistical F test
data. is expressed as follows:
3.1 Classic Assumption Test H0 : Follow the model of OLS
Ha : Follow the model Fixed Effect
The criteria for acceptance and rejection as
Before performing regression tests, performed first follows:
classical assumption. For a multiple regression If the p-value> 5% then H0 is accepted.
analysis of the assumptions used are as follows: If the p-value ≤ 5% then H0 is rejected.
JB value calculated at 27.57 while Chi Square
with df = 5, then df = 67 at α = 5% is 87.11. 3.3.2 Significance Tests Random Effect
Normal distribution of data. through Lagrange Multiplier test (LM
The correlation coefficient between independent test)
variables never be more than 0.8. There is no
problem of multicollinearity. The hypothesis is as follows:
The value of t-statistic and probability value was H0 : Model follow Random
not significant (greater than 0.05). No problem Ha : Model follow OLS
heteroskedastisitas The criteria for acceptance and rejection as
Durbin-Watson value of 2.1923, which means follows:
1.7366 <2.1923 <(4-1.5029) or 1.7366 <2.1923 If the value of LM statistic is greater than the
<2.4971. There is no autocorrelation. value of chi-square Statistically, the null
3.2 Panel Data Regression Models hypothesis is rejected.
If the value of LM statistics> critical value of
Based on the operationalization of the variables chi squares then rejected and accepted.
mentioned above, the variable X1 is profitability, X2
is liquidity, X3 is leverage, variable X4 is activity and 3.3.3 Significance Tests Fixed Effect or
Y is the stock price. Regression analysis will give you Random Effect through Hausman Test
an idea how much value if the stock price of
profitability, liquidity, leverage and activity change With the acceptance criteria as follows:
(increase or decrease). If the value of the Hausman statistic is greater
General panel data regression equation is as than the critical value then the right model is
follows: the fixed effect model.
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