jurnal skripsi inggris

INFLUENCE OF ROA, CURRENT RATIO, DAR, MARKET TO BOOK

RATIO (MBR) AND SIZE OF THE ADOPTION STOCK OPTION

PROGRAM (Case Study to firms conducting ESOP (Employee Stock

Option Plan) on the Stock Exchange period 2000-2009)

HamidahFaculty of Economics Universitas Negeri Jakarta

Email : [email protected]

Umi MardiyatiFaculty of Economics Universitas Negeri Jakarta


Eva Fatihatus SaadahFaculty of Economics Universitas Negeri Jakarta


ABSTRACT

Broadly the purpose of this study is to investigate the effect of ROA, Current Ratio, DAR, Market to Book Ratio (MBR) and Size both simultaneously and partially to total rupiah of stock options granted to employees the company extensively in the adoption of ESOP. Objects that are used in this study were non-financial companies listed on the Stock Exchange that implement ESOP, observed pool with period in 2000 until 2009. The analytical tool used in this study is Multiple Linear Regression Analysis using OLS method. F-test and t-test was used to test the hypothesis. The research method is a causal research. The results showed that the variation of the total rupiah of stock options (ESOP) can be explained by 52,91 % by 5 variation of independent variable such as ROA, Current Ratio, DAR, Market to Book Ratio (MBR) and Size. This study shows that ROA, Current Ratio, DAR, Market to Book Ratio and Size effect simultaneously the total rupiah of stock options but only partially ROA, MBR and Size Variable effect the total rupiah of stock options. Research also shows that Size has the most significant influence to the total rupiah of stock options. This suggest that size is a factor that greatly affects the total rupiah of stock options.

Keywords: Employee Stock Option Plan, ROA (Return On Asset), Current Ratio, DAR (Debt to Asset Ratio), Market to Book Ratio (MBR), Size, Agency Problem

mailto:[email protected]



INTRODUCTION

The company's goal is to maximize shareholder wealth as reflected in the increase

in stock price. This goal is not always run smoothly, because it has been known that the

managers have personal goals that are not aligned with company goals. This will

cause the agency problems between managers and shareholders.

To avoid and minimize agency problems are usually carried outsurveillance

of managers through an audit of financial statement and provide a compensation

package for managers. Compensation of managers can be a salary and bonus, Employee

Stock Option Plan (ESOP) and long-term incentive plan (Ansar, 2004).

Employee Stock Option Plans (ESOP) is one of the company's long term policy

involving the psychology of labor in the form of compensation programs based equity

(stock) (Astika, 2006).

Costa in Ansar (2004) argued that ESOP would encourage employees and

managers always try to increase share price in the future because of that employees

and managers would get benefit from compensation based stock.

This program has been widely used because it has been growing awareness of

the importance of alignment between manager and shareholders. In Indonesia, this

program organized and coordinated by BAPEPAM and known by Employee

Stock Ownership Program (PKSK) and arranged in PSAK No.53 (IAI, 2002).

Development of companies that adopting ESOP in Indonesia can be seen in table

1. From table 1 can be seen that the number of companies that adopting

ESOP until year 2009 are 58 companies and only 13.7% from 422 total companies

listing on the Indonesia Stock Exchange. Here can be seen the number of

companies listing on the Stock Exchange which adopted ESOP is still small whereas

a lot of benefits can be gained from adopting ESOP.

This study intended to analyze the fundamental factors measured

by financial ratios and firm size that significantly affected the adoption of ESOP with

view of how much total rupiah of stock options granted to employees and executives.

The research was based on previous studies such as research of Astika (2006), Uchida

(2006), Qian and Sun (2001).

Table 1: Development of Public Company Adopting ESOP on the Stock Exchange

Source : Based on the author from various source

In this study investigated the effect of ROA, Current Ratio, Debt to Asset Ratio

(DAR) , Market to Book Ratio (MBR) and Size both simultaneously and partially to

total rupiah of stock options granted to employees the company extensively in the

adoption of ESOP.

This study provides some benefits, for science, this study provides

knowledge what factors affect the adoption of ESOP. ESOP is measured from the

total rupiah stock options that will be granted company to executives and employees

and also as well as one of basic considerations for companies in an effort

to improve program employee stock option program (ESOP).

THEORY STUDY

Agency theory is a potential conflict of interest created when managers are given

power by the owner of the company to make decision where manager may have

personal goals. (Brigham and Houston, 2006: 26).

Agency conflict between managers and shareholders or owners can be minimized

by a monitoring mechanism that can align interests between managers and

shareholders. The monitoring mechanism can cause agency costs. According

to Jensen and Meckling (1976) agency costs includes three costs, they are

monitoring cost, bonding cost and residual loss.

In the context of financial management, agency relationship can occur between

shareholders and managers also shareholder and creditors (Brigham and

Houston, 2006: 26).

Number Year Number of FirmsCumulative

Number

1 1999 1 1

2 2000 3 4

3 2001 8 12

4 2002 10 22

5 2003 9 31

6 2004 6 37

7 2005 3 40

8 2006 2 42

9 2007 10 52

10 2008 4 56

11 2009 2 58

Based on studies conducted by BAPEPAM (2002:10), the purpose of

implemented ESOP :

1. Giving award (reward) for all employees, directors, and certain parties for his

contribution to increasing the company's performance.

2. Creating alignment of employee interests and the mission and executive

officers with shareholder interests and missions, so there is no conflict of

interest between shareholders and those who run the company's business activities.

3. Improve employee motivation and commitment to the company because they are also

the owners of the company, which is expected to increase productivity and company

performance.

The hypothesis in this study are:

H1: ROA has negative effect to total rupiah of stock options

H2: Current Ratio has negative effect to total rupiah of stock options

H3: DAR has negative effect to total rupiah of stock options

H4: MBR has positive effect to total rupiah of stock options

H5: SIZE has negative effect to total rupiah of stock options

H6: ROA,Current Ratio, DAR, Market to Book Ratio (MBR) and SIZE simultaneously

effect total rupiah of stock options.

METHODOLOGY

This study is causal research with quantitative approach which in this study will

identify a causal relationship between the variables studied. variable is defined as the

cause is called the dependent variable and the variables defined as the result is called the

independent variable.

Research Variables and Measurement

Independent Variables

Independent variables used in the study is financial ratios which proxy by ROA,

Current Ratio, DAR, Market to book ratio (MBR) and company size.

1. ROA (Return On Asset) is a profitability ratio that used to measure the effectiveness

of the company in generating profits by utilizing the company's overall assets. ROA =

net income / total assets.

2. Current Ratio is liquidity ratios used to measure a company's ability to meet its short

term obligations with short-term resources (or current) available to meet corporate

obligations. Current Ratio = Current assets / current liabilities

3. DAR (Debt to Asset Ratio) is one measure of long-term solvency ratios (leverage

ratio) are commonly used to view the company's long-term ability to meet its

obligations. DAR = total debt / total assets

4. MBR (Market to Book Ratio) is one measure of the ratio market value. Companies

usually use MBR to analyze the Growth Opportunities. MBR = market value per

share / book value per share.

5. SIZE is the amount of assets owned by the company. A proxy for firm size is natural

logarithm value of total assets. SIZE = ln Total assets

Dependent Variables

Dependent variable in this study is ESOP whose value is measured by the total

rupiah of stock options (grants) through the conversion of each option with shares of

stock multiplied by the value agreed in the contract at maturity. Values are standardized

by the function ln (natural logarithm) (Iswandi, 2009) so that Grants is the natural

logarithm of total rupiah of stock options. Grants (total rupiah of stock options) = price

of shares ESOP maturity X number of shares ESOP

Population and Sample Determination Method

In determining the populations and samples, researcher used a purposive sampling

method. Criteria used in the selection of the sample firms are as follows:

1. Non-financial companies listed on the Indonesia Stock Exchange

2. The company reported full annual report in the period

3. The Company uses the fiscal year ending in December

4. The Company did not delisted during the study period

5. Companies that adopt ESOP and the data available in annual reports.

Data Collection Procedures

Using reports from BAPEPAM, data recording public offering of shares on the

Stock Exchange and the data used in other studies to determine the list of companies

that adopt ESOP, using the company's financial statement of samples to obtain

information about the implementation of ESOP and ESOP data information required

for testing, using ICMD as source data information of company's financial performance

in the form of financial ratios.

Analysis Methods

In this study using multiple linear regression analysis with the OLS method. With

the regression equation model as follows:

lnGrantit = α +β1 ROAit + β2 CURATit + β3 DARit + β 4 MBRit + β5

lnSIZEit + εit

where:

Grant = the natural logarithm of total rupiah of stock options.

Shares of stock options X value agreed in the value at maturity

contract.

ROA = ratio of net income to total assets

Current Ratio = ratio of current assets to current liabilities

DAR = ratio between total debt to total assets

MBR = market value per share divided by book value per share

Size = natural logarithm of total assets

α = intercept

β1, β2, β3, β4, β5 = regression coefficients

ε = residual (error variable)

Regression Model Testing Stage

1. Data processing with Microsoft Excel to include all the dependent variables and

independent variables of the financial statements.

2. Conduct a test of quality through test data with outliers and normality test.

3. Data processing to obtain descriptive statistics with the program Eviews 7.0

4. Conduct a test to detect the presence of the classical assumption of

multicollinearity,autocorrelation and heteroskedasticity

5. Perform regression data pool by using the OLS method between the independent

variables to the dependent variable.

6. Perform statistical test t, F, and R2 and interpret data.

RESULTS AND DISCUSSION

Analysis Unit Description

In this study the authors used a sample of all non-financial companies listed on

the Stock Exchange the period 2000-2009 and selected 35 companies that collected 70

samples of of observations.

Before knowing the influence between variables in the regression equation, first

know the characteristics of the data by looking at mean values of variables used to

measure the average value of a distribution of data (group data) and standard deviation

to measure the average value calculated from the difference or deviation any data

averaging. Table 2 summarizes descriptive statistics of all variables needed for testing

using regression models.

JML_RP_OPSI_SAHAM_JUTA ROA CURRENT_RATIO DAR MBR SIZE_JUTA

Mean 40029.79 0.066273 7.050429 0.524857 3.930286 4469160. Median 4496.625 0.044500 1.675000 0.515000 1.780000 1900248. Maximum 567291.6 0.401500 334.2400 1.540000 24.71000 27872467 Minimum 47.15670 -0.296400 0.270000 0.040000 -0.020000 20481.00 Std. Dev. 97096.08 0.122035 39.76071 0.229092 5.448995 6358872. Skewness 4.116587 0.680609 8.132001 1.004737 2.237530 2.276124 Kurtosis 21.00149 5.198531 67.41926 7.467598 7.159026 7.883442

Jarque-Bera 1142.864 19.50216 12875.21 69.99247 108.8607 129.9986 Probability 0.000000 0.000058 0.000000 0.000000 0.000000 0.000000

Sum 2802085. 4.639100 493.5300 36.74000 275.1200 3.13E+08 Sum Sq. Dev. 6.51E+11 1.027590 109083.1 3.621349 2048.716 2.79E+15

Observations 70 70 70 70 70 70

Table 2 : Descriptive Statistics

Source : Data Processed by Eviews 7.0

Table 2 shows that mean value total rupiah of stock options (GRANT) is

40029.79 million, ROA is 0.066273, Current Ratio is 7.050429, DAR is 0.524857,

MBR is 3.930286 and Size is 4469160 million. From the table can be seen the value

of standard deviation greater than the mean (average) indicating that there is a large

deviation of data with average.

Study Result and Discussion

Quality Test Data

1. Outlier test.

After conducting tests and exclude an outlier then this study has been

free from outliers. Before the outlier excluded value of R2 is 0, 455 and after

removing the outliers obtained R2 is 0.564 and shown on table 3.

Table 3 : OutlierTest Result

Casewise Diagnosticsa

Case Number

Std. Residual

ln Jml Rp Opsi Saham

Predicted Value Residual

62 -4.148 176.690 23.729.916 -60.609.293

Model Summaryb

Model RR

SquareAdjusted R

Square Std. Error of the Estimate1 .751a .564 .529 12.482.074

a. Predictors: (Constant), ln Size, current ratio, mbr, dar, roa

b. Dependent Variable: ln Jml Rp Opsi Saham

Source : Data Processed by SPSS 19.0

2. Normality test

The results of statistical test for normality using the Jarque Bera (JB) test. From the

Result obtained that the probability value of JB is 0.893282 (89.32%) greater than

alpha 5%, then the data is normally distributed (Winarno, 2009)

Model Summaryb

Model RR

Square

Adjusted R

Square Std. Error of the Estimate1 .675a .455 .413 14.611.935

a. Predictors: (Constant), ln Size, current ratio, mbr, dar, roa

b. Dependent Variable: ln Jml Rp Opsi Saham

Figure 1 : Normality Test Result

0

1

2

3

4

5

6

7

8

9

-2 -1 0 1 2 3

Series: ResidualsSample 1 69Observations 69

Mean 1.24e-14Median 0.001795Maximum 3.069694Minimum -2.535613Std. Dev. 1.201441Skewness 0.028516Kurtosis 2.725676

Jarque-Bera 0.225706Probability 0.893282


Multiple Regression Testing

1. Multicollinearity test

In this test, the authors use the correlation matrix among variables to detect

multicollinearity. Multicollinearity in a model can be seen if the correlation between

two variables have a value above 0.8 (rule of thumb), Nachrowi (2006:247). From

the results of testing using Eviews at table 4 can be seen that among the independent

variables do not have a value above 0.8. Therefore, the authors conclude there is

no multicollinearity in this study.

Table 4: Multicollinearity test Result

ROA CURRENT_RATIO DAR MBR LN_SIZE

ROA 1.000000 -0.059292 -0.085379 0.311818 0.341225

CURRENT_RATIO -0.059292 1.000000 -0.107783 -0.083774 -0.070898

DAR -0.085379 -0.107783 1.000000 -0.108490 0.388855

MBR 0.311818 -0.083774 -0.108490 1.000000 -0.238811

LN_SIZE 0.341225 -0.070898 0.388855 -0.238811 1.000000


2. Heteroskedasticity Test

In this study the authors using White Heteroskedasticity Test through

Eviews program. In this White test, the value that must be considered is

the OBS * R-squared (chi squares) and probability.The results of Probability (P-

value) 0.2292 > 0.05 means that there is no heteroskedastisicity in this study.

Heteroskedastisicity test results, shown in table 5.

Table 5 : Heteroskedasticity Test Result

Heteroskedasticity Test: White

F-statistic 1.396910 Prob. F(5,63) 0.2376Obs*R-squared 6.886290 Prob. Chi-Square(5) 0.2292Scaled explained SS 4.953331 Prob. Chi-Square(5) 0.4216

Test Equation:Dependent Variable: RESID^2Method: Least SquaresDate: 05/22/11 Time: 23:17Sample: 1 69Included observations: 69

Variable Coefficient Std. Error t-Statistic Prob.

C -1.340671 1.948274 -0.688133 0.4939ROA^2 -9.323020 7.190029 -1.296660 0.1995

CURRENT_RATIO^2 -1.49E-05 1.68E-05 -0.884934 0.3796DAR^2 -1.460920 0.762328 -1.916394 0.0599MBR^2 0.000739 0.002469 0.299343 0.7657

LN_SIZE^2 0.004311 0.002499 1.725085 0.0894

R-squared 0.099801 Mean dependent var 1.422541Adjusted R-squared 0.028357 S.D. dependent var 1.882412S.E. of regression 1.855530 Akaike info criterion 4.157159Sum squared resid 216.9085 Schwarz criterion 4.351429Log likelihood -137.4220 Hannan-Quinn criter. 4.234233F-statistic 1.396910 Durbin-Watson stat 1.896058Prob(F-statistic) 0.237625


3. Autocorrelation Test

The author uses Breusch-Godfrey test to see whether there is

autocorrelation with lag 2. According Widarjono (2009: 149) lag selected by

trial error test by looking at the value of AIC and SIC are the smallest in order to

get the best reply model and the results can be seen in Table 6. The results of using

Breusch-Godfrey test indicates that the value p-value (0.1130) > 0.05, which

means there are no autocorrelation. Test results can also be seen from

the calculated value of χ2 arithmetic is 4.359948 <χ2 table. (df = 2, α = 5%) is

5.99147, which means there is no autocorrelation at lag 2.

Table 6 : Breusch-Godfrey Test Result

Breusch-Godfrey Serial Correlation LM Test:

F-statistic 2.057214 Prob. F(2,61) 0.1366Obs*R-squared 4.359948 Prob. Chi-Square(2) 0.1130

Test Equation:Dependent Variable: RESIDMethod: Least SquaresDate: 05/23/11 Time: 14:58Sample: 1 69Included observations: 69Presample missing value lagged residuals set to zero.


C 0.375607 2.926428 0.128350 0.8983ROA 0.345024 1.494427 0.230874 0.8182

CURRENT_RATIO -0.000326 0.003848 -0.084698 0.9328DAR 0.068534 0.747430 0.091692 0.9272MBR 0.006606 0.031480 0.209861 0.8345

LN_SIZE -0.016397 0.109248 -0.150094 0.8812RESID(-1) 0.212147 0.131927 1.608061 0.1130RESID(-2) -0.191475 0.131283 -1.458493 0.1498

R-squared 0.063188 Mean dependent var 1.24E-14Adjusted R-squared -0.044315 S.D. dependent var 1.201441S.E. of regression 1.227774 Akaike info criterion 3.356934Sum squared resid 91.95315 Schwarz criterion 3.615961Log likelihood -107.8142 Hannan-Quinn criter. 3.459698F-statistic 0.587775 Durbin-Watson stat 1.934873Prob(F-statistic) 0.763287


Multiple Linear Regression Analysis

Testing is done with do regression all independent variables such as ROA,

Current Ratio, DAR, MBR and the SIZE to the dependent variable total rupiah of stock

options (ESOP). After going through the classic assumption test, this study has been

free to multicollinearity, autocorrelation and heteroskedasticity so we get the best

model for multiple regression equations shown in Table 7.

Table 6: Mulitiple Linier Regression Analysis Result

Dependent Variable: LN_JML_RP_OPSI_SAHAM

Method: Least Squares

Date: 05/22/11 Time: 23:03

Sample: 1 69

Included observations: 69


C 2.728069 2.948002 0.925396 0.3583

ROA -2.851531 1.508463 -1.890354 0.0633**

CURRENT_RATIO 0.002091 0.003826 0.546572 0.5866

DAR 0.197154 0.750757 0.262607 0.7937

MBR -0.054895 0.031777 -1.727525 0.0890**

LN_SIZE 0.725689 0.110259 6.581651 0.0000*

R-squared 0.563724 Mean dependent var 22.79791

Adjusted R-squared 0.529099 S.D. dependent var 1.818955

S.E. of regression 1.248207 Akaike info criterion 3.364235

Sum squared resid 98.15536 Schwarz criterion 3.558505

Log likelihood -110.0661 Hannan-Quinn criter. 3.441309

F-statistic 16.28082 Durbin-Watson stat 1.651278

Prob(F-statistic) 0.000000

Note : ** Statistically significant at level 10%

*Statistically significant at level 1%


Hypothesis Test Results

Based on the result of a regression test in table 6, the hypothesis test using t-stat

and F-stat test and the coefficient of determination. F-stat test can be seen seen from

the value probability of Fstat value is 0.0000 < 0.05, H0 is rejected, which means ROA,

Current Ratio, DAR, Market to Book Ratio (MBR) and SIZE simultaneously affect total

rupiah of stock options.

Based on the results in table 6 can be seen the value of each independent variable t

statistics to total rupiah of stock options.

1. The effect of ROA to total rupiah of stock options (ESOP)

ROA variable has a coefficient of -2.851531 and the probability of the t-stat test

showed a significant 6.33%. This shows that ROA has a negative and significant

impact on total rupiah of stock options (ESOP). The company that have low ROA

will tend to adopt ESOP. Low ROA means that the resulting low profit, to seek

additional funding sources, companies are usually issued ESOP as additional capital

by giving stock options to employees and corporate executives. These results are

supported by Astika (2006) and Iswandi (2009) and consistent with the hypothesis.

2. The effect of Current Ratio to total rupiah of stock options (ESOP)

Current Ratio variables have a coefficient of 0.002091 and probability of t-stat test is

58.66%, this indicates that Current Ratio variable is not significant. Positive

coefficient means the higher the level the liquidity of the company the higher

implementing the ESOP. Current Ratio indicates that the higher the number of funds

that are embedded in current assets. To finance the operations needed funds, one of

which could be met by applying ESOP. Based on study of BAPEPAM (2002:10) one

of the goals held ESOP is to give an award (reward) for all employees, directors, and

certain parties for his contribution to increasing the company's performance. This is

in line with the results of the study authors that with increasing current ratio as a

proxy for one measure of financial performance (liquidity ratio) then the company

will provide rewards in the form of ESOP to all employees, managers, directors and

commissioners. These results are supported by the Anshar (2004) that the variable

liquidity in 2000 and 2001 have a positive coefficient on ESOP and Astika (2006)

but contrary to the hypothesis, Current Ratio is negative and significant effect on

total rupiah of stock options (ESOP).

3. The effect of DAR to total rupiah of stock options (ESOP)

DAR variable has a coefficient 0.197154 and probability of t-stat test is 79.37%, this

suggests that the t-stat test DAR variable is not significant. Positive coefficient

means the higher the level the leverage the company the higher to implement the

ESOP, because the circumstances facing the company in financing and capital

needs. Companies with high debt levels indicated that the company can not take

loans again and in accordance with the Debt Covenant (contract long-term debt) is an

agreement that aims to protect creditors of the manager's actions against the interests

of creditors. The company implemented the ESOP as an alternative source of

corporate funding. This is consistent with Core and Guay (2001) that when firms

face financing and capital requirements tend to apply the ESOP. These results fit

previous studies such as Astika (2006), Ding and Sun (2001) and Ansar (2004).

4. The effect of MBR to total rupiah of stock options (ESOP)

MBR variable has a coefficient -0.054895 and t-stat test showed a significant at

8.9%. This shows the MBR negatively affect the to total rupiah of stock options

(ESOP). MBR low causing low growth of the company so the stock market price is

low, then companies tend issue stock options to executives and employees. Expected

by granting stock options to managers and employees as an incentive for them to

improve their performance to increase the market price of company stock in the

future. If the stock price increases at the time of carrying out stock options gained a

high market price, so this option would provide financial incentives for executives

and employees. These results are contrary to the hypothesis and previous

studies. Previous research stated by Uchida and Ding and Sun that the MBR be

positively related to ESOP. These differences may be due to differences in

measurement used in this study, measurement of the MBR which is used is stock

price of the stock market to the price of the book, other differences are differences of

objects and study period used and the different characteristics of investors.

5. The effect of SIZE to total rupiah of stock options (ESOP)

SIZE variable has a coefficient of 0.725689 and t-stat test showed a significant at

1%. This suggests that SIZE proxy by total assets has positive effect on the total

rupiah of stock options (ESOP). The higher the SIZE of a company, the higher the

adopt ESOP. In Indonesia, companies that adopt ESOP are large companies like

Indosat, Astra International, Astra Agro Lestari because have proffesionals to design

the ESOP program. These results are in accordance with agency theory, that a low

level of managerial ownership (shareholding <100%) can cause agency problems. In

larger companies will lower the level of managerial ownership, therefore, would be

more difficult to monitor the performance of managers. Large firms have greater

incentives to adopt the ESOP to reduce agency problems. Uchida (2006) and Benz et

al (2001) states that the the larger comapany the company the greater granted stock

options. Managers in large firms tend to have to allocate assets more complex. In

large firms the lower the level of managerial ownership, making it more difficult to

monitor the performance of managers. Therefore at large firms are more likely to

adopt the ESOP to reduce agency problems. The results of research studies according

Astika (2006), Uchida (2006) and Benz et al (2001), but contrary to the hypothesis

that the smaller companies adopt ESOP.

Coefficient of Determination

This study has value of Adjusted R Squared is 0.529099 . This meansthat 52.91%

of the variation of the number of dollars of stock options (grants) can be explained by

the variation of the five independent variables such as ROA, Current Ratio, DAR,

Market toBook Ratio and Size. While the rest of 47.09% is explained by other variables

not included studied.

CONCLUSIONS AND SUGGESTIONS

Conclusion

Based on data analysis and from previous discussion can be

concluded that simultaneously, there is significant influence between ROA,

Current Ratio, DAR (Debtto Asset Ratio),MBR (Market to Book Ratio) and Size to

total rupiah of stock options. In addition there are other variables that affect total

rupiah of stock options outside of the research variables. Based on test results

of multiple regression analysis using OLS method, the fundamental factors that

affect total rupiah of stock options (ESOP) can be concluded as follows:

1. ROA has a negative and significant influence on total rupiah of stock options

(ESOP). This conclusion supports previous studies such as Astika (2006) and

Iswandi (2009)

2. Current Ratio has a positive coefficient and no significant to total rupiah of stock

options (ESOP). This conclusion supports previous studies such as Astika (2006) and

Anshar (2004)

3. DAR has a positive coefficient and no significant total rupiah of stock

options (ESOP). This conclusion supports previous studies such as Ding and Sun

(2001) and Ansar (2004), Astika(2006) and Adli (2009).

4. MBR has a negative and significant influence on total rupiah of

Stock options (ESOP). This conclusion supports previous studies such

as Uchida (2006) and Ding and sun (2001).

5. SIZE has a positive and significant influence on total rupiah of

Stock options (ESOP). This study shows that Size has the most Significant

influence on total rupiah of stock options. This suggests that the Size is a factor

that greatly affects total rupiah stock options. This conclusion supports previous

studies such as Astika (2006), Uchida (2006) and Benz et al (2001).

Suggestion

From the results of study can be suggested several things, first stock option

associate compensation to executives and employees with the future success so that

the conditions for the development of capital markets will largely determine the success

of this program. Therefore, managers are expected to try to make the company

grow in coming years so that stock prices will rise and when

implementing stock options gained a high market price, so this option would provide

financial incentives for executives and employees. Second, this study assess decision

total rupiah of stock options only from the fundamental consist of ROA,

Current Ratio, DAR, MBR and Size. For further research is expected to assess in terms

of other fundamental variables or non-financial variables such as qualitative variables

like personal characteristics of managers (such as gender).

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Anshar, M, 2004. Analisa Latar Belakang dan Pengaruh Penerapan Employee Stock Option Plan (ESOP): Studi Empiris di Indonesia. Tesis S2 (unpublished)

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