Inflation, Exchange Rates, and Return on Assets in Explaining Manufacturing Stock Prices

This study investigates how inflation, exchange rates, and return on assets shape stock prices among manufacturing firms. Using archival data and multivariate regression techniques, we evaluate whether macroeconomic conditions and firm profitability provide distinct explanatory power for equity valuation. The findings indicate that inflation exerts a significant and negative influence on stock prices, consistent with cost pressures, higher discount rates, and weaker consumer purchasing power that erode expected cash flows and valuation multiples. By contrast, exchange rate movements display no significant partial effect on stock prices for predominantly domestically oriented manufacturers, likely due to natural hedges, currency matched contracts, and offsetting exposures across supply chains. Furthermore, return on assets does not significantly explain contemporaneous stock prices, suggesting that investors prioritized resilience, pricing power, and cash flow quality over accounting profitability during the period studied. These results highlight the primacy of inflation dynamics in shaping equity prices in manufacturing, while underscoring muted direct sensitivity to currency fluctuations and profitability ratios. Practical implications include strengthening cost pass through mechanisms, pursuing operational hedges, and communicating cash flow durability. Future research should probe nonlinear thresholds, regime dependence, and disaggregated exposure profiles to reveal conditional effects that average estimates may obscure across different market contexts.

Authors

Institutions

Publication Details

Journal
JUMAD Journal Management Accounting & Digital Business
Published
2025-08-22
DOI
https://doi.org/10.51747/pt2cq665
Primary Topic
Financial Reporting and Valuation Research
Type
article
Field-Weighted Citation Impact
0.00
Controls
|||
ALL TIME
JAN
FEB
MAR
APR
MAY
JUN
JUL
AUG
SEP
OCT
article

Inflation, Exchange Rates, and Return on Assets in Explaining Manufacturing Stock Prices

Venny Maulidah
JUMAD Journal Management Accounting & Digital Business
Financial Reporting and Valuation Research
article

Inflation, Exchange Rates, and Return on Assets in Explaining Manufacturing Stock Prices

Venny Maulidah
article en

Abstract

This study investigates how inflation, exchange rates, and return on assets shape stock prices among manufacturing firms. Using archival data and multivariate regression techniques, we evaluate whether macroeconomic conditions and firm profitability provide distinct explanatory power for equity valuation. The findings indicate that inflation exerts a significant and negative influence on stock prices, consistent with cost pressures, higher discount rates, and weaker consumer purchasing power that erode expected cash flows and valuation multiples. By contrast, exchange rate movements display no significant partial effect on stock prices for predominantly domestically oriented manufacturers, likely due to natural hedges, currency matched contracts, and offsetting exposures across supply chains. Furthermore, return on assets does not significantly explain contemporaneous stock prices, suggesting that investors prioritized resilience, pricing power, and cash flow quality over accounting profitability during the period studied. These results highlight the primacy of inflation dynamics in shaping equity prices in manufacturing, while underscoring muted direct sensitivity to currency fluctuations and profitability ratios. Practical implications include strengthening cost pass through mechanisms, pursuing operational hedges, and communicating cash flow durability. Future research should probe nonlinear thresholds, regime dependence, and disaggregated exposure profiles to reveal conditional effects that average estimates may obscure across different market contexts.

JUMAD Journal Management Accounting & Digital Business
Universitas Panca Marga (ID)
Openalex Percentile: Top 68%
Financial Reporting and Valuation Research
AI Navigator

Ask Laika to Summarize, Analyze, and Connect papers live on the map.

Summarize Papers & Methodologies

Extract key findings, datasets, and comparative methods across publications.

Benchmark Rankings & Visual Analytics

Rank top research institutions, authors, funders, topics, and journals by Field-Weighted Citation Impact (FWCI) and paper volume with instant charts.

Connect Distant Disciplines

Bridge topological clusters on the map to find hidden collaborative intersections.

Inflation, Exchange Rates, and Return on Assets in Explaining Manufacturing Stock Prices — Venny Maulidah · JUMAD Journal Management Accounting & Digital Business (2025) | TGRS Research Map | TGRS