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.