The Effect of Macroeconomy on Stock Performance of LQ45 Companies at IDX

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Gunarto, Angelica Giovanni and Sembel, Roy (2019) The Effect of Macroeconomy on Stock Performance of LQ45 Companies at IDX. International Journal of Business, Economics and Law, 19 (1). pp. 22-29. ISSN 2289-1552

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Abstract

Performance of economy can be measured by several indicators, such as, real GDP growth rate, interest rate, inflation rate, and exchange rate. These variables can in turn have impacts on the returns of securities. The performance of a firm is also influenced by these macroeconomic variables. It is imperative that firms should be aware of these elements to manage the effect on its future cash flows and profitability. This study examines the effect of changes in currency exchange rate of IDR versus USD, rates of real GDP growth, inflation, and interest on the stock performance of LQ45 companies at IDX from 2008-2018. The research designs used in this study are cross-sectional, time-series, and event study method. To have a more reliable result, these data undergone several tests, which are descriptive statistics, normality, auto correlation, multicollinearity, regression, F-test, and t-test. The result of this study showed that the currency exchange rate of IDR versus USD, the rates of real GDP growth, and interest were significantly affecting the stock performance and have negative coefficient. Whereas the inflation rate was insignificant in explaining the stock performance. In general, macroeconomic variables were found to have a strong relation with stock market. This means that macroeconomic variables can be used to explain fluctuation in the stock return of LQ45 index. The authors believe this study will be beneficial for investors, academicians, and firms. Keywords: Exchange Rate, Real GDP Growth Rate, Inflation Rate, Interest Rate, Stock Performance

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Research And Community Empowerment > Journals
Depositing User: Rizky Amalia
Date Deposited: 27 Jan 2020 04:39
Last Modified: 19 Feb 2021 05:21
URI: http://repository.ipmi.ac.id/id/eprint/632

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