Correlational analysis of firm size and price to earnings ratio towards stock return: a case study of lq45 listed companies in indonesian stock exchange
Stock return can be hardly to predict, though it?s important for investor to have somernfinancial tools to decide in which stock they have to put their money in. Some ratios including firm size and price to earnings ratio have been widely studied. Nevertheless,the research about this issue is still minimal in the Indonesian capital market.. This research studies about the correlation between firm sizes, trailing price to earnings ratio towards actual stock return in LQ45 listed companies in Indonesia using IBM SPSS software for the observed period of 2007-2011. Furthermore this study also tries to see the correlation between leading or forward price to earnings ratio towards subsequent stock return for the forward period of 2012-2016. The results found that there is a correlation between firm size and trailing price to earnings ratio towards actual stock return during the observed year and there is no significant positive correlation between leading (P/E) ratio and subsequent stock return in the predicted years.
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