INVESTMENT GROWTH AND THE RELATION · PDF fileSKRIPSI Submitted As Complementary of Assignments To Fulfill The Requirement For The Degree of Sarjana Ekonomi (SE) ... ACKNOWLEDGEMENT

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INVESTMENT GROWTH AND THE RELATION BETWEEN

EQUITY VALUE, EARNINGS, AND EQUITY BOOK VALUE

(Evidence From Manufacturing Companies of Indonesia Stock Exchange)

SKRIPSI

Submitted As Complementary of Assignments

To Fulfill The Requirement For The Degree of Sarjana Ekonomi (SE)

of Sebelas Maret University

By:

FAJAR WAHYU WULANDARI

F0309018

FACULTY OF ECONOMICS

SEBELAS MARET UNIVERSITY

SURAKARTA

2014


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MOTTO

; Surely, with each difficulty, there is ease. ~Al Insyirah, 5

; If there is a will, there’s a way. ~Anonymous

; What doesn’t kill you makes you stronger. ~Kelly Clarkson

; Don’t think of the things you didn’t get after praying. Think of the

countless blessing God gave you without you even asking.

~Anonymous

; Don’t leave anything behind but trace. ~Anomymous

; When you think that you don’t have a choice, the truth is that you

don’t really want any choices. ~Writer


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DEDICATION

This Skripsi and all the things I have achieved,

Truly dedicated to:

Ibu, Mas Hanung, Mas Hafid, Mbak Iyo, and our little Qean.

And for Bapak, I hope you could at least give me a smile from somewhere up

there.


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ACKNOWLEDGEMENT

Assalamualaikum. Wr. Wb.

Alhamdulillahirobbil’alamin, the writer will be grateful to Allah SWT for

all the mercy and bless so that I was able to finish this research well. This Skripsi

is submitted to complete all of the requirements of achieving the degree of

Sarjana Ekonomi of Accounting Department of Sebelas Maret University,

Surakarta.

The writer realizes that she could not have finished this Skripsi without all the

supports and involvement of many parties both directly and indirectly. I owe a

very great and thanks to:

1. Dr. Wisnu Untoro, M.S., as the Dean of Economics Faculty of Sebelas

Maret University, Surakarta.

2. Drs. Santoso M.Si., Ak., as the Head of Accounting Department of

Sebelas Maret University Surakarta.

3. Drs. Muhammad Agung Prabowo, M.Si., Ph.D., Ak, as my advisor. I do

want to express my deepest thanks for all his helps and his considerable to

give advices to me.

4. Drs. Wartono, M.Si., Ak., as my academic advisor, thanks for all your

supports and advices.

5. Ibu, the bestest mother in this world. Thanks for bringing me to this

beautiful world and give your love and your care to your only daughter. I

love you and I will always be.


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6. My brothers and My only sister. Thanks for being my brother and my

sister all this time. Don‟t forget to give my biggest hug to our little Qean,

okay? I love you.

7. Om and Tante Mudia. Thanks for always be there for us. Thanks for all

your supports. I wish I could express my feeling because I won‟t be here if

it is not because of you. Dek Adil, Dek Amal, and Dek Arum, don‟t forget

to study hard. You must be better than your brothers and your sister.

8. My big family: Mbah Uti, aunties, uncles, pakdhe, budhe, nieces, and

nephews. Thanks for everything and I love you all.

9. All the lectures and staffs at Economics Faculty of Sebelas Maret

University Surakarta, especially for Pak Man and Pak Timin, thanks for all

the knowledge, guidance, and service.

10. My Fun-tastic Four: Gita, Jihan, and Ferda. Thanks for always be there for

me. I wouldn‟t stand still if it was not because of you, girls. Thanks for all

the beautiful memories of us. Let‟s keep making memories wherever we

are! If you ever stuck in the middle of the sea, don‟t bother to call me, ya!

11. Bapemania 2009: Ganis, Via „Ojek‟, Rendi, and Kukuh, Mas Nafis as my

very first Pimred, Jayko, Laksmi, Fifi, Esty, Mba Nila, and Udin from

KOME 2011, DSO team: Mas Agung, Mas Bothy, Mas Ponari, Mas Arif,

Mas Ciput, and Mas Angga, and all Bapemania wherever you are, thanks

for the hardworks and for everything we have done up until now. MAKIN

SOLID!


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12. My partner in pain: Adhi „Pak Ketu‟ and Iin, I knew we could do it! It‟s a

„script‟ and it tastes „sweet‟, right?

13. Accounting 2009 „A‟mazing: Jalu, Aldhy, Adit, Gepeng, Andri, Galgil,

Galih, Haifa, Rani, Jessica, Jokowi, Hendro, Hananto „Crong‟, Rozi, let‟s

keep our „A‟mazing-ness and „A‟wesome-ness. Sukses, ya! Surely I will

miss being around you, guys. Who is the best? Accounting Society!

14. My only Airen friend: Lani. Let‟s go to Seunggi‟s concert next time, Beb.

But, you don‟t forget about saving some for your future, do you?

15. Imersi 69 Family: Aken, Abed „Qebo‟, Aji, Nina, Rendy, Fafa, Sora, Rara

„Ndut‟, Dhika, Dita, Yaya, Dwi, Titus, Asri, Sari, Ndari, Adrian

„Menyink‟, Angga, and our mother, Ibu Siwi. Thanks for everything. Let‟s

meet up again sometime, guys. All hail isyuta!

16. The big family of PLASMA 4. Thanks for letting me know about

mountain hiking and all about living in the jungle. Halo, Mbul!

17. My almamater: SMA Negeri 4 Surakarta, SMP Negeri 1 Surakarta, SD

Negeri Banyuanyar 1 Surakarta, SD Negeri Ngijo 1 Karanganyar, SD

Negeri Gawanan 1 Karanganyar, and TK Dharma Wanita Colomadu,

thanks for every lesson and every memory. I am not what I am now if I

had not attended school. Jaya Jaya Jaya!

18. IRMA and RISMADA Family. We‟re definitely happy, free, and

nggaweng at the best way.

19. My black Acer and Asus. I don‟t know how I should thank to you since

you had done so much work for me, ever since editing KOME until my


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Skripsi. Mwah! And for my love, „Panda‟ Supra, you know, I always ride

a Honda since I was a kid. But, still, you are the best.

20. All of my twitter followers and IDWS Forum, don‟t forget about your

REAL world, ya. I‟m sorry if I have flooded your timeline with my things.

21. All people I can not mention one by one, thanks for everything, thanks for

all your supports.

22. Bapak and Mbah Kakek. I intentionally save you for the last number

because I really want to say thank you for the memories and everything

you gave to me. You are no longer here anymore, but I know that you will

always watch over me from somewhere up there. I love you so much!

The writer realizes that this research is far from being perfect. This research

has a lot of constraint, thus any suggestions and critics are expected for the sake of

improvement of this research.

As I close this acknowledgment, I expect that this writing will be useful to all

parties.

Wassalamu’alaikum Wr. Wb.

Surakarta, December 3, 2013

The Writer,

Fajar W. Wulandari


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TABLE OF CONTENTS

Page

PAGE OF TITLE......................................................... .................................... i

PAGE OF ADVISOR‟S APPROVAL ............................................................. ii

PAGE OF APPROVAL ................................................................................... iii

PAGE OF MOTTO .......................................................................................... iv

PAGE OF DEDICATION ............................................................................... v

ACKNOWLEDGEMENT ............................................................................... vi

TABLE OF CONTENT ................................................................................... x

LIST OF TABLES ........................................................................................... xiii

LIST OF APPENDIXES .................................................................................. xiv

ABSTRACT ..................................................................................................... xv

CHAPTER I INTRODUCTION .................................................................... 1

1.1. Background ........................................................................................ 1

1.2. Problem Statements ........................................................................... 4

1.3. Research Objective ............................................................................ 5

1.4. Research Benefits .............................................................................. 5

CHAPTER II THEORITICAL FRAMEWORK ........................................... 7

2.1. Growth ............................................................................................... 7

2.2. The Research Model .......................................................................... 8

2.3. Equity Value ...................................................................................... 9

2.4. Earnings ............................................................................................. 10


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2.5. Equity Book Value............................................................................. 11

2.6. Conceptualism of Development of Hypotheses................................. 12

CHAPTER III RESEARCH METHODS ....................................................... 16

3.1. Research Design ................................................................................ 16

3.2. Population and Sample ...................................................................... 16

3.3. Source and Data Collecting Technique ............................................. 17

3.4. Operational Definition and Measurement of Variables ..................... 18

3.4.1 Independent Variables .............................................................. 18

3.4.2 Dependent Variable ................................................................... 19

3.5. Data Analysis Methods ...................................................................... 19

CHAPTER IV DATA ANALYSIS..................... ........................................... 22

4.1. Data Collection Analysis .................................................................... 22

4.2. Classical Assumption Test ................................................................. 23

4.3. Descriptive Analysis ........................................................................... 23

4.4. Multivariate ........................................................................................ 25

4.4.1 Profitability ................................................................................ 26

4.4.2 Investment Growth .................................................................... 27

4.4.3 Firm Size .................................................................................... 28

4.4.4. Profitability, Investment Growth, and Firm Size, and The Relation

Between Equity Value, Earnings, and Equity Book Value ................ 29

CHAPTER V CONCLUSION ........................................................................ 32

5.1. Conclusions ........................................................................................ 32

5.2. Research Contraints ........................................................................... 34


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5.3. Research Suggestions ........................................................................ 34

REFERENCES........................................................................ ........................ 36

APPENDIXES


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LIST OF TABLES

Page

Table IV.I Data Research Collection ....................................................... 22

Table IV.2 Variables Definition ............................................................... 23

Table IV.3 Descriptive Statistics .............................................................. 24

Table IV.4 Coefficient Correlation .......................................................... 25

Table IV.5 Descriptive Statistics – Profitability Region .......................... 26

Table IV.6 Descriptive Statistics – Growth Region.................................. 28

Table IV.7 Descriptive Statistics – Firm Size........................................... 29

Table IV.8 Linear Regression.................................................................... 30


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LIST OF APPENDIXES

Appendix I List of Samples

Appendix II Descriptive Statistics

Appendix III Classical Assumption Test

Appendix IV Regression Analysis – Low Profitability Area

Appendix V Regression Analysis – Medium Profitability Area

Appendix VI Regression Analysis – High Profitability Area

Appendix VII Regression Analysis – Low Growth

Appendix VIII Regression Analysis – High Growth

Appendix IX Regression Analysis – Small Firms

Appendix X Regression Analysis – Big Firms


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ABSTRACT

INVESTMENT GROWTH AND THE RELATION BETWEEN

EQUITY VALUE, EARNINGS, AND EQUITY BOOK VALUE

(Evidence From Manufacturing Companies of Indonesia Stock Exchange)

FAJAR WAHYU WULANDARI

NIM. F0309018

The objective of this research is to examine the impact of investment

growth towards the relationship between equity value, earnings, and equity book

value in Indonesia. Furthermore, the researcher adds two variables on this

relation: profitability and firm size.

This research focus on manufacturing companies listed in Indonesia Stock

Exchange for the period of 2008 until 2011. The research data collected from

companies financial statement and the closing share price at the end of fiscal year

from Yahoo! Finance. with purposive sampling method, the researcher obtained

316 observations.

From the regression analysis, the result shows several conclusions. First,

on profitability region, it shows that the effect becomes bigger on the higher

profitability region. These findings are consistent to Abbas, et al (2013). But, both

on growth and firm size, the results reveal that a higher (smaller) firm has a

stronger relationship between equity value, earnings, and equity book value. It

shows that investment growth proxy used in this study might not good enough to

explain the market share price of a firm. Same with growth variable, firm size

variable also shows that a bigger firm does not have a stronger relationship

between equity value, earnings, and equity book value.

Keywords: Investments Growth, Equity Value, Earnings, Equity Book Value,

Profitability, Firm Size.

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INVESTMENT GROWTH AND THE RELATION · PDF fileSKRIPSI Submitted As Complementary of Assignments To Fulfill The Requirement For The Degree of Sarjana Ekonomi (SE) ... ACKNOWLEDGEMENT