Abstract:
One way of expanding business activities is to invest in stock exchange. It is highly risky business. The ups and downs of share prices are affected by many factors. The profit shows financial condition of the company can cause the share price to go up or to go down.
This research uses purposive sampling and analytical descriptive method. The samples of shares in LQ 45 are taken from February to July 2004 in manufacturing sector; the profit data are taken from audited financial statement; and all the data of the share market prices are taken from the Jakarta Stock Exchange.
This research’s findings show that the share prices are stable during the announcement of the profit. The Correlation coefficient is positive about 0.618 to 0.624. The value of coefficient determination is between 38.2% to 38.9%. The conclusion of those findings is that if the profit increases, the share price will increase as well, but the influence is not significant. Apart from profit, there are some other factors which affect the share price. Therefore, investors and prospective investors should analyze other factors, such as market condition, internal and external company affairs, government policy, political and security condition and other outstanding issues.
