The Indonesian Accounting Review Vol. 5, No.

2, July –December 2015, pages 169 –178

The effect of liquidity, profitability, sales growth, and dividend policy

on stock prices after the implementation of IFRS
1 2
Dany Pranata , Diyah Pujiati
1, 2
STIE Perbanas Surabaya, Nginden Semolo Street 34-36, Surabaya, 60118, East Java, Indonesia

ARTICLE INFO
ABSTRACT

Article history:
The objective of this research is to find out the effect of liquidity (CR), profitability

Received 18 May 2015

(ROA), sales growth (SG), and dividend policy (DPR) on the stock price after the

Revised 25 June2015
implementation of IFRS. This is a quantitative research with the samples consisting of

Accepted 17 July 2015

13 companies of the 45 companies listed on LQ45 in Indonesia Stock Exchange (IDX)

during 2011-2013. Totally, there were 39 data collected for the analysis. The sample

JEL Classification:
was determined using purposive sampling method. The data were analyzed by using

M41
multiple linear regression analysis. The result provides evidence that lead to a conclu-

sion. Therefore, it can be concluded that, partially, the variables of Current Ratio

Key words:
(CR), Return on Assets (ROA), sales growth (SG), and Dividend Payout Ratio

Current Ratio,
(DPR) have an effect on stock prices. In addition, Current Ratio (CR), Return on

Return on Asset,
Assets (ROA), and Dividend Payout Ratio (DPR) simultaneously have a significant

Sales Growth,
effect on stock prices. However, the sales growth (SG) has no significant effect on stock

Dividend Payout Ratio, and

prices.

Stock Prices.

DOI:
ABSTRAK
Penelitian ini bertujuan untuk mengetahui pengaruh likuiditas (CR), profitabilitas

10.14414/tiar.v5i2.559

(ROA), pertumbuhan penjualan (SG), dan kebijakan dividen (DPR) pada harga sa-

ham setelah pelaksanaan IFRS. Penelitian ini merupakan penelitian kuantitatif den-

gan sampel yang terdiri dari 13 perusahaan dari 45 perusahaan yang terdaftar di

LQ45 di Bursa Efek Indonesia (BEI) selama 2011-2013. Semuanya, ada 39 data yang

dikumpulkan untuk analisis. Sampel ditentukan dengan metode purposive sampling.

Metode analisis dilakukan dengan menggunakan analisis regresi linier berganda.

Berdasarkan hasil penelitian ini, dapat disimpulkan bahwa, sebagian, variabel Current

Ratio (CR), Return on Asset (ROA), pertumbuhan penjualan (SG), dan Dividend

Payout Ratio (DPR) berpengaruh pada saham harga. Selain itu, Current Ratio (CR),

Return on Asset (ROA), dan Dividend Payout Ratio (DPR) secara simultan memiliki

pengaruh yang signifikan terhadap harga saham. Tetapi, variabel pertumbuhan penju-

alan (SG) tidak berpengaruh signifikan terhadap harga saham.

cording to Kartikahadi et transparency, the company’s

al. (2012: 29), in this era financial reportin challenging,
of globalization, along one of which is the
with the rapid convergence of
1. INTRODUCTION development of
IAS/IFRS that requires the
The rapid growth of economy in Indonesia has * Corresponding author, email
accounting standards and
caused a high competition in economic activities. In address: 1 national financial reporting to
addition, a swift current of globalization requires the diyah@perbanas.ac.id. follow the global
country to be able to compete in an internation-al developments. To cope with
market. Therefore, it is necessary that Indonesia the demands of inter-national
should adjust its existing financial standards to the economy, Indonesia, as one of
internationally applicable standards, namely IFRS the develop-ing countries, does
(International Financial Reporting Standards). Ac- communication
technology, and not want to be left behind in
adopting IFRS. IAS has planned full convergence to facilitate the internationally ac-
IFRS. This convergence is expected to be able to understanding of
169

Dany Pranata: The effect of liquidity …

ceptable financial statements and to increase the
derived from the internal environment of the com-
investment flows.
pany are dividend payment policy, sales growth,
In a high economic growth, companies are re-
and financial ratios (liquidity and profitability). In
quired to always grow and survive. In order to
this case, liquidity is one of the factors taken into
grow and survive, they should have a substantial
consideration in making investments with the aim
funding to meet the needs of the company in
to know the condition of the company in meeting
achieving the expected target. Such condition pro-
its short-term obligations. Besides, profitability and
vides the capital owners an opportunity to invest.
sales growth are also the factors that are taken into
According to Tandelilin (2010: 2), investment is a
consideration by investors in making investment
commitment to having a number of sources of
because with the high profitability and sales
funds done at this time, with the goal of obtaining a
growth, it can be said that the company has good
number of profits in the future.
prospects for investors to invest and generate op-
Investment is generally categorized into two,
timal profit. Dividend policy is essential because it
investment in financial assets and investment in
can influence investment opportunity, stock price,
real assets, (Clarensia, Rahayu, and Azizah, 2011).
financial structure, the flow of funding, and liquidi-
Investment in financial assets is carried out in mon-
ty position. This is because dividend policy pro-
ey market, such as in the form of money market
vides information on the performance of the com-
securities, certificates of deposit, and others. In ad-
pany.
dition to money market, investment can also be
The data from the financial statements are
made in stock market, sucah as in the form of
needed for determining the value of the ratio of
stocks, bonds, options, and more. Investment in
each variable that has been described earlier. AS
real assets can be made in the form of asset pur-
the study by Kartikahadi et al. (2012), it was found
chase, building erection and others.
that the IFRS convergence has a significant effect on
The role of capital markets is essential in busi-
the accounting and reporting systems, such as: (1)
ness. According to Ahmad (2004: 17), capital mar-
The use of estimates and judgments, due to the
ket serves as an intermediary that connects those
characteristics of IFRS which are more principle-
who need funds to parties who have excess funds,
based than the previous Statement of Accounting
which is a function of the market economy. In addi-
Atandard and Financial Accounting Standard
tion to economic function, capital market also has
(PSAK/ISAK) which are more rule-based. Thus, it
financial function, providing return to investors or
can be judged to determine how a financial transac-
fund owners in accordance with the selected in-
tion is recorded. (2) The increased use of fair value.
vestment.
IFRS are more inclined to use fair value, such as for
In capital market, there is a wide range of
property, investment, some intangible assets, and
companies from different sectors. Investing in the
financial assets. Thus, the competent resources are
stock market requires considerable knowledge,
needed to calculate the fair value, or possibly hire a
experience, and business sense to analyze which
consultant to calculate particularly for assets that
stocks that will be bought, sold, or retained. Inves-
do not have an active market value. (3) The more
tors should be rational in the face of capital markets
and more detailed disclosure requirements. IFRS
and should have a precise estimate of the compa-
requires the disclosure of various information con-

ny’s future whose shares cerningwillwith qualitativebebought,andquantitativesold,risks.The or

retained. The information that could be used by disclosure of financial statements should be consis-

investors in assessing the performance of a compa- tent with the data or information used by the man-

ny is attained through its financial statement. agement in decision-making.

Based on the analysis of the financial state- Several approaches have been developed in

ment, many factors should be considered by inves- IFRS with the aims to improve transparency, ac-

tors in determining the investment decisions. For countability, and comparability of the financial

example, investors can determine the ratio between statements among the entities globally. It will have

the intrinsic value of the stock and the market price an impact on the components and elements of the

of the stock of the company concerned. Based on financial statements, such as assets, liabilities, equi-

the comparison, they can make a decision such as ty, revenues and expenses. This will also have an

whether to buy or to sell the stocks. Many variables impact on the profits of a company. Some of these

can affect the company's stock price. These factors elements will be determinant in calculating inde-

are from either external environment or internal pendent variable in this study.

environment of the company itself. The variables This study was done on companies listed on
17
0
The Indonesian Accounting Review Vol. 5, No. 2, July –December 2015, pages 169 –178

LQ45 in Indonesia Stock Exchange 2011-2013 be-

company is the ability to use certain working capi-
cause the stocks of the companies are the most ac-
tal to produce a certain profit so that the company
tive in the trade. Beside, the stocks in LQ45 index
does not get difficulty in recovering its debts, both
are the stocks that have a high level of liquidity and
short-term and long-term, and dividend payment
capitalization.

to investors who have invested in the company

(Haryetti & Ekayanti, 2012).

2. THEORETICAL FRAMEWORK AND HYPO-

Profitability is the ability of a company to gen-
THESES

erate profits. If the company is profitable or promis-

Signaling Theory

ing the future profits, many investors will come to

Signaling theory describes how a company should
invest in the company. It is certainly pushing the
give a signal to the users of its financial statements.
stock price rise higher. According to Brigham and
This signal contains information about the perfor-
Houston (2010: 146), profitability ratio reflects the
mance by the management to realize the wishes of
final results of the entire financial policy and opera-
the owner. The signal can be either promotion or
tional decisions.

other information, which states that the company is

There are some profitability ratios such as: (1)
better than others are. In the framework of signal-
profit margin on sales which is obtained by divid-
ing theory, it is said that the urge of a company to
ing net income by the sale. Net profit is profit after
provide information is that because there is an
interest. A company has an identical operation if
asymmetry
of information between
the
company’s

the sales, operating costs, and its EBIT are the same.
managers and the investors. The company's man-
But if the company uses more debt than others,
agers know the information about the company
then the company will have the burden of higher
and its prospects better than others do (Wolk et al.
interest and it will decrease net income, (2) return
2008: 94).

on total assets is obtained by comparing the net

income to total assets, (3) basic earning power

Liquidity

(BEP) is obtained by comparing the amount of

Liquidity ratio is the ratio that indicates the ability
earnings before interest and taxes (EBIT) to total
of a company to meet its short-term debt obliga-
assets, (4) return on common equity (ROE) is ob-
tions. The company, which is able to meet its finan-
tained by comparing net income to common equity.
cial obligations on time, means that the company is

in a liquid state and has more current assets than

Sales Growth

the current debt. Subramanyam and Wild (2010:

Deitiana (2011) explained that sales growth reflects
239) stated that liquidity refers to the availability of
the manifestations of the past success and these can
the
company’s resources
to meet
the
company's

be used as prediction for future growth. The man-

short-term cash needs.
agement needs to consider the appropriate funding
In general, the liquidity ratio used is (1) Cur-
source for spending those assets. High levels of
rent Ratio which is derived from the ratio of current
sales growth can illustrate that the revenue of the
assets and current liabilities. (2) Quick Ratio or Ac-
company has increased. Further, Deitiana (2011)
id Test is derived from the ratio of current assets
revealed that the sustained sales growth is the level
minus inventory and current liabilities.
where the company's sales could grow, depending
Murhadi (2009: 57) recommended that liquidi-
on how the assets support the sales increase.
ty ratio deal with two ratios. Too high ratio illu-
A company, which has a high growth rate,
strates that the company is too much to save its
should provide sufficient capital to finance the
current assets, whereas current assets are less able
company itself. The company’shigh-growthispre-
to generate returns than fixed assets. Another one is
ferred to take profits on investment in order to have
the too low ratio (less than 1) that illustrates the
better prospects. Thus, the company that has a high
risks, that the company is not able to meet matur-
sales growth rate will require more investment in
ing liabilities.

various elements of assets, either fixed assets or

current assets.

Profitability

Brigham and Houston (2010: 146) stated that profit-

Dividend Policy

ability is the net income of a range of policies and

According to Sartono (2001: 281), dividend policy is
decisions. High profitability will attract investors
related to making a decision such on whether the
and the company can distribute the profits in the
profits obtained by the company can distributed to
form of
dividend
payments. Profitability for a
shareholders as dividends or retained in the form

171