Earnings Power and Dividend Strategies: An Empirical Investigation of Their Joint Impact on Stock Prices in the Manufacturing Industry

DOI

10.2991/978-94-6463-758-8_113How to use a DOI?

Keywords

Dividend per share; Earning per share; Stocks prices; Signaling theory; Manufacturing sector

Abstract

This study investigates the effect of Dividend Per Share (DPS) and Earnings Per Share (EPS) on stock prices in the manufacturing sector of companies listed on the Indonesia Stock Exchange (IDX) in 2021. Employing a quantitative approach, multiple linear regression analysis was used to examine the relationships between the independent variables, DPS and EPS, and the dependent variable, stock prices. The results reveal that while DPS and EPS jointly have a significant influence on stock prices, EPS exhibits a more substantial and statistically significant impact when considered individually. This finding aligns with signalling theory, which suggests that higher profitability, as reflected in EPS, serves as a positive signal to investors regarding the future prospects of a company. The research also shows that DPS, while not significant on its own, plays an important role when combined with EPS, contributing to investor confidence and the overall stability of stock prices. These findings imply that investors in Indonesia’s manufacturing sector tend to prioritise profitability over dividend payouts when making investment decisions, although dividend policy remains a secondary but supportive factor in the valuation process. This study contributes to the growing body of literature on stock price determinants by providing empirical evidence from an emerging market context, specifically the Indonesian manufacturing industry. The results underscore the critical role of earnings in driving stock valuations and offer practical insights for investors and corporate managers in emerging economies.

Copyright

© 2025 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Download article (PDF)

TY  - CONF
AU  - Indramaja Tamigau Sambel
PY  - 2025
DA  - 2025/07/30
TI  - Earnings Power and Dividend Strategies: An Empirical Investigation of Their Joint Impact on Stock Prices in the Manufacturing Industry
BT  - Proceedings of the 9th International Conference on Accounting, Management, and Economics 2024 (ICAME 2024)
PB  - Atlantis Press
SP  - 1409
EP  - 1419
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-758-8_113
DO  - 10.2991/978-94-6463-758-8_113
ID  - Sambel2025
ER  -