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2.3.5 Relations between liquidity ratio and stock return
Adesola & Okwong (2009) used liquidity ratio as a control variable to support
the independent variable ( dividend policy). The result of their research showed a
positive relationship between liquidity ratio and stock return. This finding is
supported by research by Ulupui (2007) . Ulupui ( 2007) observed about the influence
of liquidity ratio to stock return, and the results noted that investors will get higher
return if there is an increase in company’s liquidity ratio. Thus, liquidity ratio affects
stock return positively.
Therefore, based on the supporting theories and preceeding studies above, the
sixth hypothesis is developed :
H6: Liquidity ratio has positive relationship with stock return
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