Determinant of price earning ratio in the property and real estate company : case study listed in Indonesian Stock Exchange 2011-2018

Abstract

Purpose: This research is aimed to find out the determinant of Price Earning Ratio (PER) in the property and real estate company listed in Indonesian Stock Exchange for the period 2011-2018. Design/methodology/approach: Referring to the developed model by Afza & Tahrir and Amalia by using 6 independent variables including Dividend Payout Ratio, Tobin’s Q, Leverage, Market Return, Earning Growth and Size, are expected to renewal in results in order to obtain variables that influencing the movement of Price Earning Ratio in property and Real Estate Company. Findings: From panel data analysis method, it can be found that fixed effect model is the most suitable model for both the changes of Price Earning Ratio in the property and Real Estate Company. The results of each variable can be explained that Tobin’s Q has positive impact, meanwhile Earning Growth and Size has negative impact. Afterwards, this research is also expected to provide framework of thinking for the policy maker to attract the attention of investor in the property and real estate company sector. Practical implications: The article offers insights to Price Earning Ratio in property and Real Estate Company that listed in Indonesian stock exchange period 2011-2018 simultaneously, partially and identifies the regression model of panel data inside. Originality/value: The article presents there are five significant free variables, including Tobin’s Q, Leverage, Market Return, Earning Growth and Size that influence the Price Earning Ratio in property and Real Estate Company.