tells the overview of research results about stock price in F&B sector

1. How stock valuation and dividend
policy affect stock prices: an empirical
study of food and beverage sector in
Indonesia
FIRLY IRHAMNI AND LULUK INDAH DASMETA
DEPARTMENT OF MANAGEMENT, FEBTD, UNIVERSITAS NAHDLATUL ULAMA SURABAYA

2. INTRODUCTION
the consumer products
sector has a significant
impact on the capital
markets
the growth of the industrial
sector is greatly influenced
by the food and beverage
(F/B) industry
Although (F/B) products were
worth US$27.28 billion in
2019facing the negative effects of
the economic slowdown brought on
by COVID-19 in 2019-Q1 2021
Issuers and investors
negotiate stock prices of
F/B sector
EPS, Stock valuation and
dividend policy are prominent
conditions for investors to
invest in F/B stock

3. PROBLEM STATEMENT
1
• Is EPS has significant impact on the stock price of F/B
sector?
2
• Is stock valuation has significant impact on the stock
price of F/B sector? ?
3
• Is dividend policy has significant impact on the stock
price of F/B sector?

4. THEORITICAL FRAMEWORK
• informational signals are required to find out and assess whether an investor has invested in the subject
company.
• a. Customer Effect Theory  investors always base their decisions on the dividend policies selected by
firms, which may encourage investors to stay with this firm or transfer to another firm, as a result of
changes in dividend policies.
• b. Agency Theory  while management wishes to increase the portion of retained earnings to guarantee
that there are sufficient funds available for investment or expansion reasons, investors want to enhance
their cash gains by distributing a bigger percentage of profits, which creates agency conflict.
SIGNALING
THEORY
• a measure of how much money an investor makes for each share of common stock they possess. A greater
EPS value shows that a business can offer investors a higher degree of welfare (Dewi, 2015)
Earning per
Share
• price-to-earnings ratio shows the earnings growth of a company. Give Hanafi et al. claim that PER is a
component of market relations. whose viewpoint is more reliant on that of the investor or potential
investor (2016:85).
• price-to-book value is the performance of the stock market price relative to its book value is gauged by the
market ratio (market ratio). This ratio demonstrates how much value an industry may produce relative to
the quantity of capital invested (Novitasari, 2013)
Stock valuation
• Neutral theory dividend policy (M&M, 1961) the decision about profit distribution has no bearing on either the
market price of the company's stock or its market value. Instead, a corporation's value is only influenced by the
earnings it has generated and any risks to its assets
• Bird-In-The-Hand Theory  investors believe that one bird in the hand is worth more than a thousand in the sky.
the market value of a firm is directly impacted by dividend policy since higher payouts result in a lower needed
return on invested capital.
• Tax preference theory  according to Litzenberger and Ramaswamy the different tax treatment of dividends and
capital gains influences investor behavior, investors prefer businesses that pay modest dividends or none at all
since the amount of taxes that must be paid is kept to a minimum
DIVIDEND
POLICY

5. Hypothesis Development
 The impact of EPS on the stock price  Companies with
larger earnings per share are more appealing to investors. A
circumstance like this would have an effect on the value of the
firm's shares, notably an increase in share prices and an
increase in book value (PBV) of the company (Yusrizal &
Juneris, 2018).
 The impact of stock valuation on the stock price 
Hanafi et al. (2016:85) claim that PER is a component of
market relations. whose viewpoint is more reliant on that of the
investor or potential investor. A ratio called the Price Earnings
Ratio (PER) indicates to an investor how much he is willing to
pay for each share. Meanwhile for PBV, investors can quickly
determine how much a stock's market value has increased from
its book value using the PBV ratio. According to Tryfino
(2009), cited by Ramadhani (2016), this ratio can give a general
picture of the probable price swings of a stock.
 The impact of dividend policy on the stock price  A high
DPR signifies that the level of profit sharing by the company is
also high, which in turn, boosts the interest of investors in
 Research Hypothesis
 H1: Earnings Per Share (EPS) ratio
has a significant effect on stock prices
 H2: Stock valuation with the
notation of Price Earning Ratio (PER)
and Price to Book Value (PBV) ratio
has a significant effect on stock prices.
 H3: The Dividend Policy has a
significant effect on stock prices with
notation Dividend Per Share and
Dividend Payout Ratio has a significant
effect on stock prices.

6. Variable Proxy Formula
Earning per share EPS
𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝑃𝑒𝑟 𝑆ℎ𝑎𝑟𝑒
=
𝑁𝑒𝑡𝑡 𝑃𝑟𝑜𝑓𝑖𝑡
Weighted Average Shares Outstanding
𝑋 100%
Stock valuation PER
𝑃𝑟𝑖𝑐𝑒 𝐸𝑎𝑟𝑛𝑖𝑛𝑔 𝑅𝑎𝑡𝑖𝑜
=
𝑆ℎ𝑎𝑟𝑒 𝑝𝑟𝑖𝑐𝑒
𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
𝑋 100%
Stock valuation PBV PBV =
𝑆ℎ𝑎𝑟𝑒 𝑝𝑟𝑖𝑐𝑒
𝐸𝑞𝑢𝑖𝑡𝑦 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
𝑋 100%
Dividend policy Dividend per share 𝐷𝑃𝑆 =
𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑎𝑚𝑜𝑢𝑛𝑡
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑠ℎ𝑎𝑟𝑒 𝑜𝑢𝑡𝑠𝑡𝑎𝑛𝑑𝑖𝑛𝑔
𝑋 100%
Dividend policy Dividend payout ratio
𝐷𝑃𝑅 =
𝐷𝑖𝑣𝑖𝑑𝑒𝑛𝑑 𝑝𝑒𝑟 𝑠ℎ𝑎𝑟𝑒
𝐸𝑃𝑆
𝑋 100%

7. MODEL ANALYSIS
Model Analysis (Multiple Linear Regression Model)
𝑆𝑡𝑜𝑐𝑘 𝑝𝑟ice
= −2888,566 + 338,673 𝐸𝑃𝑆 + 31,375 𝑃𝐸𝑅 + 131,783 𝑃𝐵𝑉 + 3,962 𝐷𝑃𝑆
+ 1304,963 𝐷𝑃𝑅 + e
Stock price = 𝛼𝑖 + 𝛽1𝐸𝑃𝑆 + 𝛽2𝑃𝐸𝑅 + 𝛽3𝑃𝐵𝑉 + 𝛽4𝐷𝑃𝑆 +
𝛽5 𝐷𝑃𝑅 + 𝑒𝑖,𝑡

8. STATISTIC DESCRIPTIVE
N Minimu
m
Maximum Mean Std.
Deviation
STOCK
PRICE
108 50.00 16000.00 29.437.94
0
381.171.8
89
EPS 108 -61.00 873.00 1.655.673 20.523.57
6
PER 107 -311.80 168.72 65.727 5.307.187
PBV 108 -.76 224.82 65.643 2.263.105
DPS 108 -8.60 911.12 807.809 17.284.80
2
DPR 108 -.81 5.02 .3149 .63875
Valid N
(listwise)
107

9. MULTIPLE LINEAR REGRESSION MODEL
RESULTS
*  Significant on the level of 5%

10. The impact of EPS on the stock price
 Earnings Per Share (EPS) has a positive
significant effect on stock prices, with a value
of sig. 0.000 < 0.05. According to signaling
theory, companies with high EPS values can
signal to investors that they are a good
investment. A higher EPS value indicates
that a company is able to generate a larger
net profit per share, which makes it more
attractive to investors. EPS also represents
the amount of net profit that can be
distributed to shareholders, and the higher
the EPS, the more investors are willing to
buy the stock, which can increase the stock
price
The impact of stock valuation on the
stock price
 PER has a significant effect on stock prices with
a value of sig. 0.001 < 0.05. The stock price will
rise along with the return on investment in stocks
if the price-to-earnings (PER) ratio is high or rises
(Tendi, et al., 2005). The conclusions of Arslan
and Zaman (2014) and Sari (2021), who showed
that PER has a considerable impact on stock
prices, are supported by the findings of this study.
 PBV has a noteworthy influence on the stock
prices, with a sig. value of 0.000 < 0.05.
According to signaling theory, the PBV ratio may
provide investors with encouraging information or
signals (Khairudin & Wandita, 2017). Lestari and
Susetyo (2020), a high PBV ratio shows that
investors are upbeat about a company's future
prospects. Good financial success is indicated by
a high PBV ratio value.

11. The impact of dividend policy on the stock
price
 With proxy Dividend per share (DPS) and Dividend payout ratio have a
significant impact on the stock price with respective results a value of sig. 0.047
<0.05 and 0.005 < 0.05. This result is in keeping with the Bird-In-The-Hand Theory
and previous research by Anandasayanan and Thirunavukkarasu (2016), Cristea and
Cristea (2017), Habumugisha and Mulyungi (2018), and Kanakriyah (2020). In
addition, implementing a high DPR lowers agency expenses because bigger profit
payments reduce the needed rate of return and increase the value of the company.
 According to the idea of signaling, a company's decision to declare a dividend
distribution is a sign of its potential for future profitability. The ability of the company
to disperse its profit results is described by the DPR, which is used to express the
percentage of earnings delivered to shareholders in cash (Lestari & Susetyo, 2020). As
a result, the more the market demand, the greater the share price, and the greater the
desire among investors to buy the company's shares (Ermiati et al., 2019).

12. CONCLUSION STUDY LIMITATIONS AND
FUTURE STUDY
 our study found that various independent variables had a strong positive impact on stock prices.
Specifically, we discovered that stock valuation and dividend policy significantly affected the
performance of manufacturing companies in the F/B sector on the Indonesian Stock Exchange
 Our results showed that the dividend distribution policy was concerned with assessing performance
through market valuation, and that most institutions made dividends to get more money by buying the
firm's shares.
 To maintain and increase effectiveness in terms of asset management, companies should focus on
increasing liquidity to improve financial performance in the future and attract investors. Whereas
investors should consider other factors when predicting stock prices, such as beta, company size, ratio of
book prices and market prices, seasonal patterns, loan restrictions.
 our study was restricted to the core elements of the business and did not evaluate external elements like
inflation or governmental regulations
 It is better for further researchers to be able to add the number of samples, add other variables that
have not been studied, such as: Return on Investment (ROI), Economic Value Added (EVA), also
external factors