2019Unpublished venueRequires access

The effect of earning per share and dividend per share on stock price at consumer goods companies listed on Stock Exchange Indonesia

Benita Tantowie

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Abstract

Earnings per share (EPS) and Dividends Per Share (DPS) are both reflections of a company's profitability, but that's where any similarities end. Earnings per share is a measurement that gauges how profitable a company is per share of its stock. Dividends per share, on the other hand, calculates the portion of a company's earnings that is paid out to shareholders. The phenomenon of stock price can be seen from Earning per Share (EPS) and Dividend per Share (DPS) in several consumer goods companies listed on the Indonesia Stock Exchange in the period of 2013-2017 showed that the increase in Earnings per Share (EPS) will be followed by increase in share price, and the increase in Dividend per Share (DPS) will be followed by increase in share price. This research uses the theories about earning per share, dividend per share and its impact on stock price. The framework of this research is to find out the relationship between earning per share, dividend per share and stock prices. The methods used by the writer in this research is quantitative research. Data used in this research is secondary data. This research uses multiple linear regression, hypothesis test and determination coefficient to know the impact of earning per share, dividend per share on stock price. Based on research result,the simple linear regression showed equation of Y = 4.727 + 0,327 X1 + 0,450 X2 + e. It means that variable earning per share and dividend per share has a straight relationship to stock prices, that if there is an increase on earning per share and dividend per share, the stock price will also increase. The conclusion on this research is the hypothesis test showed that the variable earning per share and dividend per share has an impact on stock price partially and simultaneously. The determination coefficient has resulted in 80.8% variable stock price can be explained by variable earning per share and dividend per share and the rest of 19.2% can be explained by another factor that is not mentioned in this research. For next researcher, the writer recommends adding other factors that can give impact on stock price such as financial leverage, corporate social responsibility, etc

About this research paper

What this paper is about

Earnings per share (EPS) and Dividends Per Share (DPS) are both reflections of a company's profitability, but that's where any similarities end. Earnings per share is a measurement that gauges how profitable a company is per share of its stock. Dividends per share, on the other hand, calculates the portion of a company's earnings that is paid out to shareholders. The phenomenon of stock price can be seen from Earning per Share (EPS) and Dividend per Share (DPS) in several consumer goods companies listed on the Indonesia Stock Exchange in the period of 2013-2017 showed that the increase in Earnings per Share (EPS) will be followed by increase in share price, and the increase in Dividend per Share (DPS) will be followed by increase in share price. This research uses the theories about earning per share, dividend per share and its impact on stock price. The framework of this research is to find out the relationship between earning per share, dividend per share and stock prices. The methods used by the writer in this research is quantitative research. Data used in this research is secondary data. This research uses multiple linear regression, hypothesis test and determination coefficient to know the impact of earning per share, dividend per share on stock price. Based on research result,the simple linear regression showed equation of Y = 4.727 + 0,327 X1 + 0,450 X2 + e. It means that variable earning per share and dividend per share has a straight relationship to stock prices, that if there is an increase on earning per share and dividend per share, the stock price will also increase. The conclusion on this research is the hypothesis test showed that the variable earning per share and dividend per share has an impact on stock price partially and simultaneously. The determination coefficient has resulted in 80.8% variable stock price can be explained by variable earning per share and dividend per share and the rest of 19.2% can be explained by another factor that is not mentioned in this research. For next researcher, the writer recommends adding other factors that can give impact on stock price such as financial leverage, corporate social responsibility, etc

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Available abstract

Earnings per share (EPS) and Dividends Per Share (DPS) are both reflections of a company's profitability, but that's where any similarities end. Earnings per share is a measurement that gauges how profitable a company is per share of its stock. Dividends per share, on the other hand, calculates the portion of a company's earnings that is paid out to shareholders. The phenomenon of stock price can be seen from Earning per Share (EPS) and Dividend per Share (DPS) in several consumer goods companies listed on the Indonesia Stock Exchange in the period of 2013-2017 showed that the increase in Earnings per Share (EPS) will be followed by increase in share price, and the increase in Dividend per Share (DPS) will be followed by increase in share price. This research uses the theories about earning per share, dividend per share and its impact on stock price. The framework of this research is to find out the relationship between earning per share, dividend per share and stock prices. The methods used by the writer in this research is quantitative research. Data used in this research is secondary data. This research uses multiple linear regression, hypothesis test and determination coefficient to know the impact of earning per share, dividend per share on stock price. Based on research result,the simple linear regression showed equation of Y = 4.727 + 0,327 X1 + 0,450 X2 + e. It means that variable earning per share and dividend per share has a straight relationship to stock prices, that if there is an increase on earning per share and dividend per share, the stock price will also increase. The conclusion on this research is the hypothesis test showed that the variable earning per share and dividend per share has an impact on stock price partially and simultaneously. The determination coefficient has resulted in 80.8% variable stock price can be explained by variable earning per share and dividend per share and the rest of 19.2% can be explained by another factor that is not mentioned in this research. For next researcher, the writer recommends adding other factors that can give impact on stock price such as financial leverage, corporate social responsibility, etc

Key concepts: Earnings per share, Share price, Dividend, Stock exchange, Price–earnings ratio, Earnings, Stock dilution, Dividend yield

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