August 21, 2025Open Access

The Effect of Profitability on Stock Prices of LQ45 Firms

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Analysis shows combined profitability ratios influence stock prices in LQ45 firms, suggesting investor strategies adapt accordingly.

Only net profit margin significantly affects stock prices, indicating a focused financial metric can lead to investment decisions.
The study found adjusted R² at 47.1%, showing profitability accounts for nearly half of stock price variations.
Using the fixed effect model allowed for better control of unobserved heterogeneity across firms in the LQ45 index.
Investors evaluate multiple profitability ratios together, highlighting a shift in financial assessment strategies.

Triana et al. (2025) studied this question.

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