Does Fundamental Analysis Still Influence Share Market Price?

Authors

  • Aida Wijaya*, Nabilla, Zaki Dzulfikar Ramadhani, Vania Faza Aulia, Raissa Syanindhita

Abstract

Often research in accounting were conducted in Stock Exchange, due to the assumption that
financial report should be used for decision making and stock exchange is the place where
decision making occurred every seconds. Financial report provides information for
fundamental analysis, such as profitability ratio. This ratio often used for the decision for
share trading and in theory should be reflected in the share market price. Due to the many
factors, which could affect the share pricing, the question raised was: does profitability ratio
still significantly influence the share market price? This research aimed to find out whether
profitability ratio influence the share market price, using the regression method and paired
sample test to measure the influence of profitability ratio on the share market price before
and after the release of financial report. The sample of this research was financial reports
and share market price of automotive component manufacture companies listed in
Indonesian Stock Exchange (IDX) during the period of 2016 – 2019. The regression models
showed that the profitability ratios did not have any significant influence on the share market
price and no significant differences in share market price between before and after the
issuance of financial report. This concludes that profitability information was not the major
factor in determining share market price.

Published

2020-10-17

Issue

Section

Articles