Investors should consider the degree of operating leverage

Oct 13, 2025 by pynkocean.com 111 views

The Effect of Total Assets, Liabilities, Equity, and Degree of Operating Leverage on Changes in the Price of the Stock Offering of the Initial Share of 2020 for the Period

Introduction

The initial public offering (IPO) is a crucial step for companies to raise capital through the sale of shares to the public. This process allows companies to expand their operations, invest in new projects, and increase their visibility in the market. However, the success of an IPO depends on various factors, including the company's financial health, operational efficiency, and market sentiment. This study aims to analyze the effect of total assets, liabilities, equity, and degree of operating leverage on changes in stock prices after the IPO that occurred in 2020.

Background

The IPO process involves the sale of shares to the public, which can have a significant impact on the company's financial health and stock prices. The total assets, liabilities, and equity of a company are critical factors that influence its financial stability and ability to generate returns for investors. The degree of operating leverage, which measures the sensitivity of a company's earnings to changes in sales, is also an important factor that affects its financial performance.

Methodology

This study used a sample of 51 companies that conducted an IPO in 2020. The data used was secondary data obtained from the Indonesia Stock Exchange Website and Yahoo Finance. The sampling technique used was saturation sampling, which involves selecting a sample until no new information is obtained. The data analysis technique used was logistical regression, which is a statistical method used to analyze the relationship between a dependent variable and one or more independent variables.

Results

The results of this study showed that simultaneously, total assets, liabilities, equity, and degree of operating leverage had a significant effect on changes in stock prices after the IPO. However, when viewed separately, total assets, liabilities, and equity did not have a significant effect. Meanwhile, the degree of operating leverage was found to have a negative and significant influence on changes in stock prices after the IPO.

Discussion

The results of this study suggest that the degree of operating leverage is a critical factor that affects changes in stock prices after the IPO. Companies with high operational leverage levels are at a greater risk of dealing with market fluctuations or changes in demand. This is because operational leverage can amplify the impact of changes in sales on earnings, which can lead to significant losses if the company is unable to manage its costs effectively.

The lack of significant effect of total assets, liabilities, and equity on changes in stock prices after the IPO may be due to other factors such as company performance and market sentiment. Investors may pay more attention to short-term performance and operational stability rather than just looking at the amount of company assets. Additionally, the Covid-19 pandemic and economic recovery that began to appear after the pandemic were also external factors that influenced investment decisions.

Conclusion

This study provides important insights for investors and company managers in understanding the dynamics that affect post-IPO stock prices. Investment decisions should not only be based on the total value of assets, liabilities, and equity, but must also consider the operational stability and the level of risk faced by the company. Companies that use operational leverage wisely can maximize income when market conditions are good, but when there is a decline, the negative impact can be felt greater. Therefore, investors need to consider the level of risk before investing.

Recommendations

Based on the findings of this study, the following recommendations are made:

Investors should consider the degree of operating leverage: Investors should consider the degree of operating leverage when making investment decisions. Companies with high operational leverage levels are at a greater risk of dealing with market fluctuations or changes in demand.
Companies should manage their operational leverage effectively: Companies should manage their operational leverage effectively to minimize the risk of dealing with market fluctuations or changes in demand.
Investors should consider company performance and market sentiment: Investors should consider company performance and market sentiment when making investment decisions. Short-term performance and operational stability are critical factors that affect stock prices.
Companies should provide transparent financial information: Companies should provide transparent financial information to investors, including their degree of operating leverage, to enable them to make informed investment decisions.

Limitations

This study has several limitations, including:

Sample size: The sample size used in this study was limited to 51 companies that conducted an IPO in 2020.
Data quality: The data used in this study was secondary data obtained from the Indonesia Stock Exchange Website and Yahoo Finance, which may not be accurate or up-to-date.
Methodology: The methodology used in this study was logistical regression, which may not be the most appropriate method for analyzing the relationship between the dependent variable and the independent variables.

Future Research Directions

This study provides several avenues for future research, including:

Investigating the effect of other factors on changes in stock prices after the IPO: Future research should investigate the effect of other factors, such as company performance, market sentiment, and economic conditions, on changes in stock prices after the IPO.
Analyzing the relationship between the degree of operating leverage and stock prices: Future research should analyze the relationship between the degree of operating leverage and stock prices to provide a better understanding of the dynamics that affect post-IPO stock prices.
Investigating the impact of the Covid-19 pandemic on investment decisions: Future research should investigate the impact of the Covid-19 pandemic on investment decisions to provide a better understanding of the external factors that influence investment decisions.
Frequently Asked Questions (FAQs) about the Effect of Total Assets, Liabilities, Equity, and Degree of Operating Leverage on Changes in the Price of the Stock Offering of the Initial Share of 2020 for the Period

Q: What is the initial public offering (IPO) and why is it important?

A: The initial public offering (IPO) is the process by which a company raises capital by issuing shares to the public for the first time. It is an important step for companies to expand their operations, invest in new projects, and increase their visibility in the market.

Q: What are the key factors that affect changes in stock prices after the IPO?

A: The key factors that affect changes in stock prices after the IPO include total assets, liabilities, equity, and degree of operating leverage. These factors are critical in determining the financial health and stability of a company.

Q: What is the degree of operating leverage and how does it affect stock prices?

A: The degree of operating leverage measures the sensitivity of a company's earnings to changes in sales. It is a critical factor that affects stock prices because it can amplify the impact of changes in sales on earnings, leading to significant losses if the company is unable to manage its costs effectively.

Q: Why did the study find that total assets, liabilities, and equity did not have a significant effect on changes in stock prices after the IPO?

A: The study found that total assets, liabilities, and equity did not have a significant effect on changes in stock prices after the IPO because investors may pay more attention to short-term performance and operational stability rather than just looking at the amount of company assets.

Q: What is the impact of the Covid-19 pandemic on investment decisions?

A: The Covid-19 pandemic had a significant impact on investment decisions, with investors becoming more cautious and risk-averse. The pandemic also led to a decline in economic activity, which affected the financial performance of companies.

Q: What are the implications of the study's findings for investors and company managers?

A: The study's findings have important implications for investors and company managers. Investors should consider the degree of operating leverage and company performance and market sentiment when making investment decisions. Company managers should manage their operational leverage effectively to minimize the risk of dealing with market fluctuations or changes in demand.

Q: What are the limitations of the study?

A: The study has several limitations, including a limited sample size, data quality issues, and the use of logistical regression as the methodology.

Q: What are the future research directions based on the study's findings?

A: The study provides several avenues for future research, including investigating the effect of other factors on changes in stock prices after the IPO, analyzing the relationship between the degree of operating leverage and stock prices, and investigating the impact of the Covid-19 pandemic on investment decisions.

Q: What are the key takeaways from the study?

A: The key takeaways from the study are:

The degree of operating leverage is a critical factor that affects changes in stock prices after the IPO.
Investors should consider the degree of operating leverage and company performance and market sentiment when making investment decisions.
Company managers should manage their operational leverage effectively to minimize the risk of dealing with market fluctuations or changes in demand.
The Covid-19 pandemic had a significant impact on investment decisions and the financial performance of companies.

Q: What are the practical implications of the study's findings for investors and company managers?

A: The practical implications of the study's findings for investors and company managers are:

Investors should be cautious when investing in companies with high operational leverage levels.
Company managers should prioritize operational efficiency and cost management to minimize the risk of dealing with market fluctuations or changes in demand.
Investors should consider the impact of the Covid-19 pandemic on investment decisions and the financial performance of companies.
Company managers should be prepared to adapt to changing market conditions and investor sentiment.