Aic Paper

Proceedings of The 5th Annuual International Conference Syiah Kuala University (AIC Unsyiah) 2015
In conjunction with The 8th International Conference of Chemical Engineering on Science and Applications (ChESA) 2015
September 9-11, 2015, Banda Aceh, Indonesia
The Influence of Liquidity, Profitability, and Dividend

Payout Ratio to Stock Price (An Empirical Study on LQ45
Index Companies Listed on The Indonesia Stock Exchange)
Nurjannah, and 2M. Rizal Yahya
Department of Accounting, Faculty of Economics, Syiah Kuala University, Darussalam,

Banda Aceh 23111, Indonesia
*Coorresponding Author: jannah0693@gmail.com
1,2
Abstract
The purpose of this research is to examine the influence of liquidity, profitability, and
dividend payout ratio on stock price. The population of this research is LQ45
companies that listed on the Indonesia Stock Exchange between 2011 and 2013.
This study used a multiple regression analysis to analyze the data. The data used in
this study is secondary data that collected from ICMD (Indonesia Capital Market
Direectory). Current ratio, return on equity ratio, and dividend payout ratio as the
indicator for the independent variable. The result showed that liquidity, profitability,
and dividend payout ratio influence the stock price both partially or simultaneously.
Key words: Liquidity, Profitability, Dividend Payout Ratio, Stock Price
Introduction
Society now is more enthusiastic to invest funds, either in the form of stock, bond,
deposit, or other forms which has expectation to get rational return in the future. Among
those forms, some people would prefer stock rather than others because it has not definite
return. It could be from 1% until 100% per capital gain. While others usually have specific
rate of return. In addition, it does not has time limit for sale. So investors can sell them
when they need.
Stock is a piece of paper that shows investors the right to obtain part of the prospect
or wealth of an organization that publishes its securities (Suad, 2005: 29). They will get
return in two forms, dividend and capital gain. Dividend is part of companys profit that will
be shared to stockholders in proportion to the amount of its share ownership (Harnanto,
2003:240). Meanwhile capital gain is the different between selling price and purchase price
that can provide gains to investor (Tandelilin, 2001: 48).
Stock price always fluctuates. The fluctuation is based on supply and demand in
capital market. In addition, it is also based on companys value. When company performs
and develops well, its price will increase. On the contrary, when the company does not
perform well, the price will decrease (Widoatmodjo, 2004:23).
There are many factors that influence stock price. One of them is profitability. Profit
help investors to know which companies are successful, which generally makes the shares
more valuable and boosts their price. Profit can influence stock price by changing market
perception and investors confidence of the company. Some researchers such as Clarensia et
al. (2012) stated that profitability has significant effect to stock price. On the other hand,
another researcher, Susanto (2012) stated that profitability does not have significant effect
to stock price.
Besides profitability, liquidity also influences the stock price. It is because liquidity
indicates the ability of the company to meet its short-term obligation. Before investing, the
investors usually see the capability of the company to return their money. Moreover this
variable also become consideration for investors.
Bolek and Wolski (2012) stated that sometimes higher liquidity is defined as a
positive sign for investor. It is because the greater the liquidity, the higher the flexibility of
the company in term of using working capital. Then, it will increase the stock price. On the
other hand, too high liquidity is also not good because it indicates that the company does
not manage the capital well. Then, the stock price also will be influenced.
Not only profitability and liquidity influence the stock price but also dividend. As we
know that, investor not only expects capital gain but also dividend. Its information can be
seen from dividend payout ratio. This information is very important for long term
investment. Meanwhile for trading, it is not really important. The higher dividend payout
ratio of company, the more favorable the companys stock. Then the stock price of the
company will increase.
In this research, the author choose LQ45 companies as the target population. One of
reasons for choosing it because it is related to one of the research variables which is
liquidity. Moreover LQ45 companies are the most liquid company among all the companies
that listed on Indonesia Stock Exchange. In addition they are the most active stock which
are really interested by investors or beginner investors. So it will increase the accurate
result of this research.
According to Subramanyam, before investing the investors will see three analysis,
those are risk analysis, profitability analysis, and valuation analysis. Risk analysis analyze
whether the company can return investors money or not, profitability analysis is an analysis
about the ability of the company in generating profit, and valuation analysis is used to
estimate of intrinsic value of a company. Those three independent of this research are
represent those analysis. Therefore the author chooses those variables as independent
varibles of this research that will influence the stock price.
This research use LQ45 companies as population which are recognized have high
liquidity. Meanwhile the previous research uses the population in manufacturing companies,
automotive companies, banking companies, and pharmacy companies. So the different
between this research and previous research is the level of liquidity.
These companies are consisted of 45 companies that have been chosen which
criteria of having high liquidity and market capitalization. Shetty and Samir (2006:13)
stated that market capitalization measure the total current replacement value of the
company. In other words, it is the price we would have to pay if we want to buy out the
company fully. The compnies that included in LQ45 index are always monitored every six
months and will be held the review at the beginning of February and August. If there are
stocks do not fulfill the criteria, it will be replaced with other stocks that are qualified.
In this research the author use financial ratio to measure the independent variables.
Financial ratio that are used in this research are current ratio for liquidity measurement,
Return on Equity for profitability measurement, and dividend payout ratio.
According to the explanation before, the stock price is influenced by liquidity,
profitability, and dividend payout ratio. When the investors want to invest their money to
stock, of course they have to see the ability of the company to return their money, and also
they have to see how much the profit that the company can be reached, and another one is
how much dividend that they will get. Meanwhile the stock price itself really depends on the
demand and supply in capital market that come from investors.
Based on statement above, then the hypothesis of this research are as follows:
H1: Liquidity influence the stock price of LQ45company
H2: Profitability influence the stock price of LQ45company
H3: Dividens Payout Ratio influence the stock price of LQ4 company
H4: Liquidity, profitability, and dividend payout ratio simultaneously influence the stock price
of LQ45 company
Materials and Methods
This research performed a census approach by using population with certain as
target population. The criteria are the companies that are consistant in the list of every
period during those three years and provide financial statement which have information
about Current Ratio, Return on Equity, and Dividend Payout Ratio.
Here are the list of the companies.
Table 1
List of Target Population
No
Company Name
1
Astra Agro Lestari Tbk.
2
Astra International Tbk.
3
Bank Central Asia Tbk.
4
Bank Negara Indonesia ( Persero) Tbk.
5
Bank Rakyat Indonesia (Persero) Tbk.
6
Bank Mandiri (Persero) Tbk
7
Indo Tambangraya Megah Tbk.
8
Jasa Marga (Persero) Tbk.
9
Perusahaan Gas Negara (Persero) Tbk.
10
Tambang Batubara Bukit Asam (Persero) Tbk.
11
Semen Indonesia (Persero) Tbk.
12
United Tractors Tbk.
13
Unilever Indonesia Tbk.
Sources: www.idx.co.id
The data used in this research is secondary data. Sekaran and Bougie (2010:183)
stated that secondary data is the information that gathered from the source that already
exist. The data in this research are financial ratio (Current Ratio, Return on Equity, Dividend
Payout Ratio) and closing price. Data collection method in this research is documentation. It
is conducted by collecting the secondary data which are published by ICMD (Indonesia
Capital Market Directory).
Data analysis method that used in this research is statistical analysis method by
using multiple regression equation. Data analysis is performed by using SPSS (Statistical
Package for Social Science). In order to determine the influence of independent variables to
the dependent variable, the author will use the following formula:
Y t+1 = + 1X1 + 2X2 + 3X3 + e
Where
:
Y t+1
= Closing Stock Price in t+1 Year
= Constanta
= Regression Coefficients
X1
= Liquidity
X2
= Profitability
X3
= Dividend Payout Ratio
e
= Variable Residual
In order to get the judgment whether the hypothesis are accepted or rejected, the
author must do hypothesis testing by statistical analysis. Analysis is done by multiple
regression which has the purpose to see the influence of independent variables to
dependent variable.
Hypothesis testing is done by two kind of tests, partial test and simultaneous test.
Because of this research uses census approach, significant tests are not conducted, whether
F test ot T test. The conclusion are directly can be seen from regression coefficient of
independent variables.
1. Simultaneous Test
The purpose of this test is to see whether independent variables (Xi,i = 1,2,3)
simultaniously influence the stock price (Y). The forms of testing are as follow:
Ho: 1 = 2 = 3 = 0, means that the liquidity, profitability, and the dividend payout ratio,
simultaneously does not influence the stock price.
Ha: 1 2 3 0, means that the liquidity, profitability, and the dividend payout ratio,
simultaneously influence the stock price.
The criteria for accepting or rejecting the hypothesis are as follow:

If i (i = 1,2,3) = 0 : H0 is accepted
If i (i = 1,2,3) 0 : H0 is rejected
Accepting H0 means that independent variables simultaniously do not influence to
dependent variable, meanwhile rejecting H 0 means that independent variables
simultaniously influence to dependent variable.
2. Partial Test
This test is done to show how far the influence of individual variables in explaining
the dependent variable. The form of this test is as follow:
H01 : 1 = 0 ; it means that the liquidity does not influence the stock price.
Ha1 : 1 0 ; it means that the liquidity influences the stock price.
H02 : 2 = 0 ; it means that the profitability does not influence the stock price.
Ha2 : 2 0 ; it means that the profitability influences the stock price.
H03 : 3 = 0 ; it means that the dividend payout ratio does not influence the stock price.
H03 : 3 0 ; it means that the dividend payout ratio does influences the stock price.
The criteria for accepting or rejecting the hypothesis are as follow:
If i (i = 1,2,3) = 0 : H0 is rejected
If i (i = 1,2,3) 0 : H0 is accepted
Accepting H0 means that independent variables partially do not influence to
dependent variable, meanwhile rejecting H 0 means that independent variables partially
influence to dependent variable.
3. The Coefficient of Determination
The coefficient of determination test shows how much the dependent variable can be
explained by the independent variables (Santoso, 2004:167). R2 value indicates the
proportion of the dependent variable explained by the independent variables. The higher of
its value the better the regression model. Therefore it signifies that the ability of the
independent variables explain the dependent variable is greater.
The value of the coefficient of determination is 0 to 1. If its value is closer to 0, then
the less the influence of all the independent variables (liquidity, profitability, and dividend
payout ratio) to the dependent variable (stock price). Meanwhile when its value is closer to
1, the greater the influence of all the dependent variables to dependent variable.
Results and Discussion
Results
Descriptive statistics were performed to know the description of each research
variable. Descriptive analysis that used in this research includes the minimum, maximum,
mean, and standard deviation value. Statistically the purpose of measuring standard
deviation is to know how much deviation from the mean value. Mean and standard deviation
is needed to measure the efficiency of the data and the analysis method that is used in this
research. The mean value that is greater than the standard deviation shows that the data
used is sufficiently efficient and valid. The research data can be seen in Table 2.
Table 2
Descriptive Statistics
Minimum
Maximum
Mean
CR
ROE
DPR
Stock Price
39
39
39
39
.45
11.39
.01
3175.00
5.50
125.81
384.94
41500.00
1.9018
32.9100
49.7015
13337.820
5
Valid N (list wise)
39
Std.
Deviation
1.28556
26.87952
64.87207
9711.80249
Resourch: SPSS Version 17.0 (2015)

Based on the Table 2 we can see that the minimum, maximum, and mean value of
variables that are researched during three years to the LQ45 companies which fulfill the
criteria. Based on the table above, the mean of Current Ratio is 1.901 with standard
deviation 1.285. The minimum is 0.45 and the maximum is 5.50.
According to the table, we can see that the mean of ROE is 32.910 with standard
deviation 26.879. The minimum is 11.39 and the maximum is 125.81. The mean of DPR is
49.701 with standard deviation 64.872. The minimum is 0.01 and the maximum is 384.94.
Meanwhile stock prices mean is 13337.82 with standar deviation 9711.82. The minimum is
3175 and maximum is 41500.
The following test is hypothesis test, this test is done to know the influence
independent variable to dependent variable partially and simultaneously. The result shows
that all independent variables influence the dependent variable both partially or
simultaneously. The table can be seen as follow:
Table 3
Hypothesis test result
Coefficientsa
Unstandardized
Coefficients
Model
1
B
(Constant)
Standardized
Coefficients
Std. Error
5923.699
3034.140
CR
506.316
1190.822
ROE
109.827
DPR
75.308
Beta
Sig.
1.952
.060
.058
.425
.674
47.731
.316
2.301
.028
19.675
.524
3.828
.001
a. Dependent Variable: Stock Price

The last test is Coefficient Determination Testing. This test is done to know how
much independent variables can explain the dependent variable. The coefficient of
determination can be seen from the R Square value from the Table 4 as follow:
Table 4
Model Summary
Model Summaryb
Model
1
R
.663
R Square
a
Adjusted R
Square
.440
.387
Std. Error of the

Estimate
7607.39472
Durbin-Watson
2.146
a. Predictors: (Constant), DPR, CR, ROE

b. Dependent Variable: Stock Price
The table above shows that the R Square value is 0.44. It means that 44% from the
change in dependent variable can be explained by liquidity (X 1), profitability (X2), and
dividend payout ratio (X3). Meanwhile the others 56% can be influenced by other factors
except variables in this research.
Discussion
Based on the resaerch that has been done, whether partially and simultaneously by
using multiple regression analysis, those three variables influence the stock price. The
following will be explained one by one the influence of liquidity (X 1), profitability (X2), and
dividend payout ratio (X3) as independent variables to stock price on LQ45 companies that
listed on Indenesia Stock Exchange.
The Influence of Liquidity (X1) to Stock Price

Based on Table 3 regression coefficient from the influence of the liquidity (X 1) to
stock price (Y) is 506.316. This study uses census method, so it does not do significant
testing to the value of the regression coefficient. Due the regression coefficient value
obtained is the actual value of the regression coefficient of the population. The Regression
coefficient value, 506.316 shows that the regression coefficient of liquidity to the stock price
is not equal to zero (1 0).
Based on hypothesis design, the requirement needed to state that liquidity (X1)
influences the stock price if the 1 0. So we can state that the result of this research is
rejecting the H01 and accepting the Ha1. It means that if liquidity increases, than the stock
price also will increase.
The result of this research is consistent with Clarensia et al. (2012) and Pasaribu
(2008), which found that the liquidity influence the stock price. It means that the company
is able to pay its short term obligation on time by it current asset that it has. It is because
every investor that invested their money, of course they want their money back and get
rational return from it.
The Influence of Profitability (X2) to Stock Price
Based on Table 3 regression coefficient from the influence of profitability (X 2) to stock
price (Y) is 75.308. This study uses census method, so it does not do significant testing to
the value of the regression coefficient. Due the regression coefficient value obtained is the
actual value of the regression coefficient of the population. The regression coefficient value
75.308 shows that the regression coefficient of profitability to the stock price is not equal to
zero (2 0).
Based on hypothesis design, the requirement needed to state that profitability (X 2)
influences the stock price if the 2 0. So we can state that the result of this research
rejecting the H02 and accepting the Ha2. It means that the higher of profitability of a
company, the higher its stock price.
The result of this research is consistent with Deitiana (2011), Pasaribu (2008), and
Clarensia et al. (2012), which found that the profitability influence the stock price. It is
because profitability shows the ability of a company to generate profit. If the company can
generate high profit, it indicates that the company use and manage the resource efficiently
and effectively.
The Influence of Dividend Payout Ratio (X3) to Stock Price
Based on Table 3 regression coefficient of the influence dividend payout ratio (X 3) to
stock price (Y) is 109.827. This study uses census method, so it does not do significant
testing to the value of the regression coefficient. Due the regression coefficient value
obtained is the actual value of the regression coefficient of the population. The regression
coefficient value, 109.827 shows that the regression coefficient of liquidity to the stock price
is not equal to zero (3 0).
Based on hypothesis design, the requirement needed to state that dividend payout
ratio (X3) influences the stock price if the 3 0. So we can state that the result of this
research rejecting the H03 and accepting the Ha3. It mean that the higher of dividend
payout ratio of a company, the higher its stock price.
The result of this research is consistent with Riantani and Faizal (2012), Sujoko and
Soebiantoro (2007), and Haruman (2007), which found that the dividend payout influence
the stock price. It is because dividend payout ratio shows the percentage of the companies
earning that will be shared to stockholders. If the company pay high dividend, it indicated
that the company does not need all the earning to be retained as a capital for next period.
The Influence of Liquidity (X1), Profitability (X2), and Dividend Payout (X3)
to Stock Price
Based on the Table 3, the value of 1= 506.316, 2= 109.827, and 3= 75.308. This
study uses census method, so it does not do significant testing to the value of the
regression coefficient. Due the regression coefficient value obtained is the actual value of
the regression coefficient of the population.
Based on hypothesis design, the requirement needed to state that all those three
variable simultaneously influence the stock if 0 (i=1,2,3) which means that there is one
of value from those three independent variables is not equal to zero. Meanwhile value
those three variables are not equal to 0. Then Ha4 is accepted.
The result of this research is in line with the research that done by Atika and
Bambang (2012) which stated that liquidity, profitability, and dividend payout ratio
simultaneously influence the stock price. It is because those three variables are included in
the fundamental factor of the company which directly related to the companys condition
and performance.
Conclusion
The result of hypothesis testing, it showed that all independent variables influence
dependent variable both partially or simultaneously. it means that the increasing of
indepedent variables will increase dependent variable.
The limitation of this study are: (1)This study uses only three independent variables
which those three variables related directly to the company (internal factor); (2) This
research used target population. So the result of this research only for LQ45 companies ;
and (3) This research only used the data for three years.
The suggestions for future research are: (1) Research can be conducted in different
index, such as kompas100 index, BISNIS-27 index, PEFINDO25 index, sektoral index, and
other indexs; (2) Research can be conducted by adding independent variables that exist, it
could be internal or external factors; and (3) Research can be done in a longer period. This
research only use three years.
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Proceedings of The 5th Annuual International Conference Syiah Kuala University (AIC Unsyiah) 2015

The Influence of Liquidity, Profitability, and Dividend

Department of Accounting, Faculty of Economics, Syiah Kuala University, Darussalam,

Here are the list of the companies.

The criteria for accepting or rejecting the hypothesis are as follow:

Valid N (list wise)

Resourch: SPSS Version 17.0 (2015)

a. Dependent Variable: Stock Price

Std. Error of the

a. Predictors: (Constant), DPR, CR, ROE

The Influence of Liquidity (X1) to Stock Price

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