Business diversification of coal mining companies as a strategy facing coal price volatility: The effect on company performance and share prices

Gusnawan Adi Putra, Sri Mulyantini and Dianwicaksih Arieftiara
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Gusnawan Adi Putra: Economics and Business Faculty, Universitas Pembangunan Nasional Veteran Jakarta, Kampus Pondok Labu, Jl. RS. Fatmawati No. 1., Pondok Labu, Cilandak, Jakarta Selatan, 12450. Indonesia
Sri Mulyantini: Economics and Business Faculty, Universitas Pembangunan Nasional Veteran Jakarta, Kampus Pondok Labu, Jl. RS. Fatmawati No. 1., Pondok Labu, Cilandak, Jakarta Selatan, 12450. Indonesia
Dianwicaksih Arieftiara: Economics and Business Faculty, Universitas Pembangunan Nasional Veteran Jakarta, Kampus Pondok Labu, Jl. RS. Fatmawati No. 1., Pondok Labu, Cilandak, Jakarta Selatan, 12450. Indonesia

International Journal of Business Ecosystem & Strategy (2687-2293), 2021, vol. 3, issue 4, 38-50

Abstract: This study aims to determine the effect of business diversification on stock prices by mediating company performance, represented by the variable ROE and EPS in a fluctuating coal price situation. The data used are 16 companies engaged in coal mining in Indonesia and listed on the Indonesia Stock Exchange (IDX) from 2012 to 2019. Using two analysis methods: path analysis to examine direct and indirect relationships between variables and different tests to see differences in the performance of companies that diversify and do not diversify. The results showed that coal commodity prices had a significant positive effect on stock prices and indirectly, through ROE and EPS, had a significant positive impact on stock prices. Business diversification directly has a significant negative impact on stock prices and indirectly through EPS positively affects stock prices. Business diversification provides a substantial difference to EPS and does not provide a significant difference to ROE.

Keywords: Business Diversification; Commodity Price; Coal; ROE; EPS; Stock Prices (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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