Examine the relationship between financial performance indicators and stock price movement in other industries

Oct 13, 2025 by recoveryshake.com 138 views

The Influence of the Company's Financial Performance on Stock Prices in the Food and Beverage Industry that Go Public on the Jakarta Stock Exchange

Introduction

The Jakarta Stock Exchange (JSX) is one of the largest stock exchanges in Southeast Asia, providing a platform for companies to raise capital and for investors to participate in the growth of the economy. The food and beverage industry is a significant sector in the JSX, with many companies listed on the exchange. The financial performance of these companies is a crucial indicator of their health and can have a significant impact on their stock prices. In this article, we will discuss the influence of the company's financial performance on stock prices in the food and beverage industry that go public on the Jakarta Stock Exchange.

The Importance of Financial Performance in the Food and Beverage Industry

Financial performance is a critical indicator of a company's health and can have a significant impact on its stock prices. In the food and beverage industry, financial performance not only reflects the company's health but also affects the movement of its stock prices. There are two main factors that affect stock prices: internal factors, such as company financial performance, and external factors that include social aspects, macroeconomics, and political stability. In this study, we will investigate how financial performance indicators, such as Return on Assets (ROA), Return On Equity (ROE), Return on Sales (ROS), Market Value Added (MVA), and Economic Value Added (EVA), affect the company's stock prices.

The Role of Financial Performance Indicators in Stock Price Movement

Financial performance indicators, such as ROA, ROE, ROS, MVA, and EVA, play a crucial role in determining the movement of stock prices. These indicators provide a clear picture of a company's financial health and can help investors make informed decisions. In this study, we will examine the relationship between these financial performance indicators and stock price movement in the food and beverage industry.

Methodology

This study is focused on five companies in the food and beverage sector listed on the Jakarta Stock Exchange, with an observation time span from 1994 to 2002. We used the F test and the T test to analyze the data, which was carried out using SPSS statistical software version 11.5. The test results showed that there was a significant relationship between all independent variable regression coefficients at a 95% confidence level, with an F ratio of 8.44, exceeding the critical value of 5.13.

The Effect of EVA on Stock Price Movement

The test results revealed that EVA has a positive and significant effect on stock price movement, with a P value of 0.841, which is greater than 0.050. This suggests that investors tend to react positively to companies with high EVA, which has the potential to increase stock prices. On the other hand, ROE, ROS, and MVA variables are not significant in influencing stock prices, with a P value of 0.021, 0.017, and 0.000, which are all less than 0.050.

Financial Performance Analysis and Stock Price

Financial performance, especially in the form of EVA, gives a clear picture of how effective the company is in creating more value for shareholders. EVA reflects net profits after reducing capital costs; therefore, the higher the EVA value, the better the company's performance in terms of value creation. This explains why investors tend to react positively to companies with high EVA, which has the potential to increase stock prices.

Conclusion

In conclusion, the company's financial performance shows a significant effect on stock prices in the food and beverage industry listed on the Jakarta Stock Exchange, especially through the Economic Value Added (EVA) indicator. Therefore, companies in this sector need to focus on increasing their EVA to attract investors and affect the movement of stock prices positively. This analysis not only provides insight to investors but also to company management in making strategic decisions that can improve their financial performance and stock prices in the future.

Recommendations

Based on the findings of this study, we recommend that companies in the food and beverage industry listed on the Jakarta Stock Exchange focus on increasing their EVA to attract investors and affect the movement of stock prices positively. Additionally, investors should consider EVA as a key indicator of a company's financial performance and stock price movement.

Limitations

This study has several limitations. Firstly, the study is limited to five companies in the food and beverage sector listed on the Jakarta Stock Exchange. Secondly, the study only examines the relationship between financial performance indicators and stock price movement over a specific time period. Finally, the study does not consider other external factors that may affect stock price movement.

Future Research Directions

Future research should consider the following directions:

Examine the relationship between financial performance indicators and stock price movement in other industries: This study only examines the relationship between financial performance indicators and stock price movement in the food and beverage industry. Future research should examine this relationship in other industries.
Consider other external factors that may affect stock price movement: This study only considers financial performance indicators as the independent variables. Future research should consider other external factors that may affect stock price movement, such as social aspects, macroeconomics, and political stability.
Examine the relationship between financial performance indicators and stock price movement over a longer time period: This study only examines the relationship between financial performance indicators and stock price movement over a specific time period. Future research should examine this relationship over a longer time period.

Conclusion

In conclusion, this study provides insight into the influence of the company's financial performance on stock prices in the food and beverage industry that go public on the Jakarta Stock Exchange. The study finds that EVA has a positive and significant effect on stock price movement, while ROE, ROS, and MVA variables are not significant in influencing stock prices. This study provides recommendations for companies in the food and beverage industry listed on the Jakarta Stock Exchange and investors to consider EVA as a key indicator of a company's financial performance and stock price movement.
Frequently Asked Questions (FAQs) about the Influence of the Company's Financial Performance on Stock Prices in the Food and Beverage Industry that Go Public on the Jakarta Stock Exchange

Q: What is the significance of financial performance in the food and beverage industry?

A: Financial performance is a critical indicator of a company's health and can have a significant impact on its stock prices. In the food and beverage industry, financial performance not only reflects the company's health but also affects the movement of its stock prices.

Q: What are the key financial performance indicators that affect stock price movement?

A: The key financial performance indicators that affect stock price movement are Return on Assets (ROA), Return On Equity (ROE), Return on Sales (ROS), Market Value Added (MVA), and Economic Value Added (EVA).

Q: Which financial performance indicator has the most significant effect on stock price movement?

A: The Economic Value Added (EVA) indicator has the most significant effect on stock price movement. EVA reflects net profits after reducing capital costs, and the higher the EVA value, the better the company's performance in terms of value creation.

Q: Why do investors react positively to companies with high EVA?

A: Investors react positively to companies with high EVA because it indicates that the company is creating more value for shareholders. This can lead to an increase in stock prices.

Q: What are the limitations of this study?

A: The study has several limitations, including:

Limited sample size: The study only examines five companies in the food and beverage sector listed on the Jakarta Stock Exchange.
Limited time period: The study only examines the relationship between financial performance indicators and stock price movement over a specific time period.
Limited external factors: The study only considers financial performance indicators as the independent variables and does not consider other external factors that may affect stock price movement.

Q: What are the recommendations for companies in the food and beverage industry listed on the Jakarta Stock Exchange?

A: The recommendations for companies in the food and beverage industry listed on the Jakarta Stock Exchange are:

Focus on increasing EVA: Companies should focus on increasing their EVA to attract investors and affect the movement of stock prices positively.
Consider EVA as a key indicator: Companies should consider EVA as a key indicator of their financial performance and stock price movement.

Q: What are the recommendations for investors?

A: The recommendations for investors are:

Consider EVA as a key indicator: Investors should consider EVA as a key indicator of a company's financial performance and stock price movement.
Focus on companies with high EVA: Investors should focus on companies with high EVA, as it indicates that the company is creating more value for shareholders.

Q: What are the future research directions?

A: The future research directions are:

Examine the relationship between financial performance indicators and stock price movement in other industries: Future research should examine the relationship between financial performance indicators and stock price movement in other industries.
Consider other external factors: Future research should consider other external factors that may affect stock price movement, such as social aspects, macroeconomics, and political stability.
Examine the relationship between financial performance indicators and stock price movement over a longer time period: Future research should examine the relationship between financial performance indicators and stock price movement over a longer time period.

Q: What are the implications of this study?

A: The implications of this study are:

Companies should focus on increasing EVA: Companies in the food and beverage industry listed on the Jakarta Stock Exchange should focus on increasing their EVA to attract investors and affect the movement of stock prices positively.
Investors should consider EVA as a key indicator: Investors should consider EVA as a key indicator of a company's financial performance and stock price movement.
Future research should consider other external factors: Future research should consider other external factors that may affect stock price movement, such as social aspects, macroeconomics, and political stability.