The Effect of Financial Reporting on Predicting Stock Price Volatility in Manufacturing Public-Listed Companies

Ika Atma Kurniawanti, Luluk Ilfathiana, Putri Ida Sistya

Abstract


Stock price volatility can be caused by insufficient or inaccurate financial data, which can lead to mistakes in a company's valuation. Many investors initially review financial information before determining whether or not to invest in a company. This study aims to investigate the effect of financial statements using several financial ratios such as Current Ratio (CR), Solvency Ratio (SR), Return on Assets (ROA), and Profit Margin (PM) on the Stock Price with Firm Size as a control variable. The impact of financial statement information on stock price volatility is explained by signaling theory. Using the purposive sampling technique, the number of samples selected was 133 manufacturing publicly listed companies on the Indonesian Stock Exchange (IDX) in 2019-2023. The data were analyzed using multiple regression analysis. Results show that CR and ROA had no significant influence on stock prices, while SR, PM, and Firm Size significantly influenced stock prices. Firm Size had the greatest positive influence among all predictors that indicating that the increase in company size was significantly linked to the rise in share prices.

DOI: http://dx.doi.org/10.23960/E3J/v8.i2.287-297


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