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Finance, Accounting and Business Analysis 
Volume 3 Issue 1, 2021 

http://faba.bg 

Fundamental and Technical Factors on Stock Prices in Pharmaceutical 

and Cosmetic Companies  

Suyanto Suyanto, Julia Safitri, Arif Prasetya Adji  

Sekolah Tinggi Ilmu Ekonomi IPWI Jakarta, Indonesia 

Info Articles  
 

Abstract 

History Article: 
Submitted 30 January 2021 
Revised 29 March 2021 
Accepted 16 April 2021 

 
In investing in the capital market, investors need accuracy in making decisions 
related to stocks. Accurate stock valuation can minimize the risk of being wrong in 
decision-making. Therefore, investors need to analyze conditions corporate finance 
for decision making in investing stock. To evaluate the company's financial 
condition, investors can do it by calculating the company's financial ratio, namely 
Earning Per Share (EPS), Debt to Equity Ratio (DER), and Return on Equity 
(ROE) and for determining the appropriate timing of the investor's transactions will 
also be considering technical factors such as the Rupiah exchange rate against the 
US Dollar, Inflation and Bank Indonesia Interest Rates. This study aims to 
determine the effect. Earnings Per Share, Debt to Equity Ratio, Return on Equity, 
Exchange Rates, Inflation, and Bank Interest Rates Indonesia to Stock Prices. The 
population in this study are Go-Public companies from the Pharmaceutical sub-
sector and the cosmetics sub-sector household goods, which are listed on the 
Indonesia Stock Exchange as long as 2014-2019 period. The sample selection 
technique in this study is purposive sampling. Thirty-six companies were acquired 
which complied research sample criteria. This study uses secondary data analyzed 
by descriptive method and multiple linear regression tested with classical 
assumption experiments, T-Test and F-Test. The results showed that the test results: 
EPS had an effect significant and partially affect the share price., DER is not has a 
significant and partial effect on stock prices., ROE has a significant effect 
simultaneously and partially share price., Exchange rate has no significant effect 
simultaneously and partially has no effect on stock prices, inflation has no 
significant effect Simultaneously and partially it has no effect on stock prices. Tribe 
Interest has no significant effect simultaneously and partially not take effect. 

Keywords:  
Earnings Per Share, Agency 
Theory, Debt to Equity Ratio 
 

 

  

   

*Address Correspondence:   
E-mail: suyanto.ipwija1993@gmail.com 
 
 

 

 



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INTRODUCTION 
 

Capital market (capital market) is a market for various long-term financial instruments that can be 

traded, both debt securities (bonds), equities (stocks), mutual funds, derivative instruments and other 

instruments. The capital market is a means of funding for companies and other institutions (such as the 

government) and as a means for investing activities. Thus, the capital market facilitates various facilities 

and infrastructure for buying and selling activities and other related activities (Stern, 2012). 

The Capital Market Law No. 8 of 1995 concerning Capital Market defines the Capital Market as 

"Activities related to Public Offerings and Securities trading, Public Companies related to the Securities 

they issue, as well as institutions and professions related to Securities". The Capital Market has an 

important role for the economy of a country because the capital market carries out two functions, namely 

first as a means for business funding or as a means for companies to obtain funds from the investor 

community, where these funds can be used for business development, expansion, addition working capital 

and others, both capital markets are a means for the public to invest in financial instruments such as 

stocks, bonds, mutual funds and others, so that the public can place their funds according to the 

characteristics of the advantages and risks of each instrument. Investing requires caution because there are 

risks that must be calculated (Kumar, 2009). 

Stock risks as an investment instrument are: capital loss, and liquidation risk, so investors must be 

observant before deciding on a transaction, where there is a price in stock transactions (Nassirzadeh et al., 

2012). Share prices increase and decrease depending on various factors, including company and economic 

fundamentals. Fundamental factors (company internal factors) consist of financial performance itself, 

including: Earning Per Share (EPS), Debt to Equity Ratio (DER), Return on Equity (ROE) while technical 

factors (company external factors) include: Value Exchange, Inflation and Interest Rates. 

This study examines the company's fundamental factors, for the market price ratio, namely EPS 

(Earning per Share) as variable X1, for the solvency ratio DER (Debt Equity Ratio) as variable X2, and the 

profitability ratio ROE (Return on Equity) as variable X3. Based on research conducted by Chang & Chen 

(2008), EPS (Earning Per Share) partially affects stock prices, in contrast to Manoppo's research (2015) 

where EPS (Earning Per Share) partially has no effect on stock prices. According to Kamar (2017) ROE 

(Return on Equity) partially affects stock prices, and is different from Utami & Darmawan's research 

(2019) where ROE (Return on Equity) has no effect on stock prices. Whereas in Akbar & Afiezan's (2019) 

research, DER (Debt to Equity Ratio) partially affects stock prices, in contrast to research (Pangemanan2, 

2014) where DER (Debt to Equity Ratio) has no effect on stock prices. 

Agency Theory (Agency Theory) developed by Jensen, M. C, and W. H. Meckling (1976). 

According to Eisenhardt (1989) Agency Theory is the theoretical basis that underlies the company's 

business practices during this time. The theory is rooted in the synergy of economic theory, decision 

theory, sociology, and organizational theory. The main principle of this theory states that there is a 

working relationship between the party giving the authority, namely the investor, and the party receiving 

the authority (agency), namely the manager. The separation of owner and management in the accounting 

literature is called Agency Theory. 

Morris & Morris (2012) Signaling Theory is an action taken by the management of a company 

that provides guidance to investors on how management views the company's prospects. Companies with 

favorable prospects will try to avoid selling shares and seek any new capital needed by other means, 

including the use of debt. Signaling Theory suggests how a company should provide signals to users of 

financial statements. This signal is in the form of information about what management has done to realize 

the owner's wishes. Signals can be in the form of promotions or other information stating that the 

company is better than other companies. Signal theory explains that signaling is done by managers to 

reduce information asymmetry. Managers provide information through financial reports that they apply 

conservatism accounting policies that produce higher quality profits because this principle prevents 

companies from exaggerating profits and helps users of financial reports by presenting quality earnings and 

assets. 

The development of this research hypothesis can be defined as a temporary answer to the problem 

under study, it still needs to be verified through the research concerned. In principle, this hypothesis is 

useful to help make research more focused. Based on the description above, the authors can draw 

temporary conclusions through research hypotheses based on problem identification, namely: 1. EPS has a 

significant effect on stock prices 2. DER has a significant effect on stock prices 3. ROE has a significant 

effect on stock prices 4. Exchange value has a significant effect on stock prices 5 Inflation has no 

significant effect on stock prices 6. Interest rates have a significant effect on stock prices. 

 

 

 



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METHODS 
 

The research was conducted at Pharmaceutical and Cosmetics & Household Supplies Companies 

listed on the Indonesia Stock Exchange for 6 (six) years from 2014 to 2019 with a sample population of 13 

companies. The population used in this study were 17 companies from the Consumer Goods Industry 

sector, the Pharmaceutical and Cosmetics & Household Supplies sub-sector which were listed on the 

Indonesia Stock Exchange from 2014 to 2019. Sampling used purposive sampling technique, namely the 

sample selection method using some criteria. 

 

Operational Variable 

Variable Y 
The share price is the price on the real market, and is the easiest price to determine because it is 

the price of a share in the ongoing market or if the market is closed, the market price is the closing price 

(Manoppo, 2015). 

 

Variable X 
According to Hanifah (2019) Earnings Per Share (EPS) is a "ratio to measure the success of 

management in achieving benefits for shareholders." The higher the EPS value, of course the shareholders 

are happy because the greater the profit provided to the shareholders. The earnings ratio shows the 

combined impact of liquidity and asset and liability management on a company's ability to generate 

profits. So, it can be concluded that EPS is a ratio that shows the amount of profit earned from each 

existing share. 

EPS = 
          

                            
 

Debt to Equity Ratio is a ratio used to determine the ratio between total debt and capital (Utami & 

Darmawan, 2019). 

DER = 
          

            
 

ROE is a ratio used to measure net income after using own capital (Manoppo, 2015). 

ROE = 
                    

             
 

Exchange rate is the price of a currency relative to the currencies of other countries. The exchange rate 

plays an important role in spending decisions (Weske & Benuto, 2015). 

KURS = 
                        

 
 

Inflation is the tendency to increase the price of goods and services. Inf = IHKn-IHKn-1) IHKn-1 x100% 

Ratio in general and continuously (Alhogbi, 2017). 

Inflasi = 
           

         
 

Central Bank Interest Rate, in this case Bank Indonesia or BI Rate, is a policy interest rate that 

reflects the monetary policy stance or stance set by Bank Indonesia and announced to the public. 

According to (Safitri et al., 2020) data on interest rates and rates of return provide information for financial 

managers to be able to determine the opportunity cost of investment. 

 

Result and Discussion 

 

Descriptive Statistics 

Table 1. Deskriptive Statistics 

 
Source: Processed data of SPSS Output, 2021 

 

From the table above, the lowest value of Earning per Share (EPS) is -106.66 and the highest 



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value is 162.060. EPS is an important measuring tool, especially for investors who have the motivation to 

invest in pursuing dividends. Because logically, the greater the EPS value, the greater the chance of getting 

dividends. Furthermore, the lowest value of Debt to Equity Ratio (DER) is 0.02 and the highest value is 

2.9. The higher the DER value a company has, the greater the company's debt to the company's capital. 

Conversely, if the lower the DER value, the lower the company's debt. The table above states that, the 

lowest value of Return on Equity (ROE) is -37.98 and the highest value is 224.46. ROE (Return on Equity) 

can also be used as an indicator, to assess how effectively a company manages to use equity financing to 

fund operations at the company in the success of the company. Return on Equity (ROE) is also used as a 

real return on the capital invested by investors. The lowest value of the Rupiah exchange rate against the 

US Dollar is 12,440 and the highest value is 14,481. The standard deviation value of 620.42 is smaller than 

the mean value of 13,600, so it shows that the data deviation is good and the mean value can represent the 

research data. The lowest inflation rate is 0.16% and the highest is 8.36%. The standard deviation value of 

2.73 is smaller than the mean value of 3.05, so it shows that the deviation of the data is good and the mean 

value can represent the research data. Bank Indonesia Interest Rate The lowest Bank Indonesia Interest 

Rate is 4% and the lowest value is 7.54. The Standard Deviation value of 1.27 is smaller than the Mean 

value of 5.98, thus indicating that the data deviation is good and the mean value can represent the research 

data. Share Price The lowest value of the share price is 100 and the highest is 55,900. 

 

Normality test 
Normality test aims to test whether the dependent variable and independent variable have a 

normal distribution. (Ghozali, 2011). A good distribution model is if the data is normally distributed or 

close to normal. The results of the Normality test are shown in the image below. 

 
Figure 1. Normalitas Test 

Source: Processed data of SPSS Output, 2021 
 

It can be seen from the chart Normal P-P plot of Regression Standardized Residual showing the 

points spread around the diagonal line, and the distribution follows the direction of the diagonal line. Then 

the regression model fulfills the normality assumption and is fit for use. To further test the level of 

normality of the data, the normality test was added using the Kolmogorov - Smirnov test using SPSS 

version 16 software to determine whether the data was normally distributed or not seen on the Asymp 

basis. Sig (2-tailed). The basis for decision making is if Asymp. Sig (2- tailed) is more than 0.05 or 5%, then 

the data is said to be normally distributed, and vice versa if Asymp. Sig (2-tailed) is less than 0.05 or 5%, 

then the data are not normally distributed. If the data is not normally distributed, then steps can be taken 

to eliminate extreme data or what is known as data outliers. However, there are some experts who 

disagree with how to delete extreme data, another way that can be taken is by transforming data. Data 

transformation is done by changing the data with certain formulas depending on the shape of the graph. 

Before transforming the data, the shape of the graph must be known to determine the formula. 

 

 

 



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Kolmogorov Smirnov Test 

Table 2. Kolmogorov Smirnov Test 

 
Source: Processed data of SPSS Output, 2021 

 

Based on the results of the normality test above, the Kolmogorov - Smirnov test value for the 

dependent variable (Y) is 1.144 and the significance value is 0.146, it can be concluded that the data is 

normally distributed (0.146> 0.05). 

 

Heteroscedasticity Test 

 
Figure 2. Heteroscedasticity Test 

Source: Processed data of SPSS Output, 2021 

  

Based on the scatterplot pattern above, it can be seen that the points spread randomly, do not form 

a certain clear pattern, and are spread either above or below the number 0 on the Y axis. So it can be 

concluded that there is no heteroscedasticity problem in this regression model. 

 

Simultaneously Test (Test F) 

Table 3. Simultaneously Test (Test F) 

 
Source: Processed data of SPSS Output, 2021 



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From the table 3 shows that the value of F count = 29.883 with a probability of Sig = 0.000. 

Because the probability of Sig is smaller than the level of the research test (Sig 0.000 <0.005), thus 

simultaneously the independent variable affects the dependent variable. Or independent variables (EPS, 

DER, ROE, exchange rates, inflation and interest rates) have a simultaneous significant effect on the 

dependent variable (stock price). 

 

Tabel 4. Summary of Test Results F 

Variable F Test Results Result  

EPS  0,000  Significant 

DER  0.009  Not significant 

ROE  0,000  Significant 

Kurs  0.997  Not Significant 

Inflasi  0,929  Not Significant 

BI Interest Rate  -0,416  Not Significant 

Source: Processed data of SPSS Output, 2021 

 

From table 4 above shows that there is a significant effect of the EPS and ROE variables and there 

is no significant effect of the DER, Exchange Rate, Inflation and BI Interest Rate variables. 

 

Goodness of Fit Test 

Table 5. Goodness of Fit Test 

Index Criteria Size Cut of Value *)  Result  Information 

Chi Square  Close to Zero 0,431  Fit 

Probability  >0,05  0,753  Fit 

CMIN/DF  <2,00  1,819  Fit 

GFI  >0,90  0,971  Fit 

AGFI  >0,90  1,019  Fit 

TLI  >0,90  1,35  Fit 

CFI  0-1,0  0,897  Fit 

RMSEA  0,05-0,08  0,124  Marginal 

Source: Processed data of SPSS Output, 2021 

 

These results indicate that the model used is acceptable. The values of Chi Square, Probability, 

CMIN / DF, GFI, AGFI, TLI, CFI show a good structural equation model. Although RMSEA is 

accepted on a marginal basis. 

 

CONCLUSION 
 

The purpose of this study is to prove and explain the variables Earning per Share, Debt to Equity 

Ratio, Return on Equity which is the company's fundamental factor and the Rupiah exchange rate against 

the US Dollar, inflation, and BI interest rates which are economic fundamental factors on stock prices of 

pharmaceutical sub-sector companies. and the cosmetics and household supplies sub-sector listed on the 

Indonesia Stock Exchange with a research period from 2014 to 2019. By using statistical analysis tools 

using Statistical Product and Service Solutions (SPSS) version 16 software. From the results of hypothesis 

testing it is concluded that simultaneously EPS and ROE has a significant effect while DER, Exchange 

Rate, Inflation and Interest Rates do not have a significant effect on stock prices. And from the partial test 

results, it is concluded that EPS, DER and ROE have a significant effect on stock prices, while exchange 

rates, inflation and interest rates do not have a significant effect. 

 

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