EMPIRICAL EVIDENCE OF MANUFACTURING GROWTH OPTIONS IN INDONESIA STOCK EXCHANGE

Abstract

The company's growth is an important expectation that desired by the parties that the company's internal and external corporate management companies such as investors and creditors. One way that companies are experiencing growth through investment activities taking into account the investment risk, which is expected to provide benefits. This study aims to analyze the relationship between value stocks, growth options and stock returns. Additionally, this research was to obtain empirical evidence of the influence of value and growth stock options with stock returns. The sample used in this study were nonfinancial manufacturing company listed on the Indonesia Stock Exchange (IDX) on the years 2005-2009 by using purposive sampling technique. Hypothesis testing was done by analyzing the data and regression analysis. The results showed that value stocks are measured using the book-to-market is negatively related to growth options, stock values are measured using the book-to-market has a negative relationship with stock returns and growth options have a negative relationship with stock returns. The results also provide empirical evidence that the value and growth stock options have a negative influence on stock returns. Variable growth options have the most significant influence on stock returns than the variable value stock. This illustrates that investors in Indonesia more attention to the growth in investment company shares.