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1. Data Collection This is done with studying the literatures, books, magazines or articles
which encourage which is done and support the theories that is used in this literature review.
2. Field study Field study is done with visiting to Jakarta Stock Exchange to get the
needed data in this research. This data analysis will be used in this research is regression
analysis. With regression analysis will be known the influence of financial ratio to initial stock price.
F. Classic Assumption Test
This test is done or meant for knowing the existence or no multicallinearity, Heteroscedasticity and autocorrelation. Classic test
assumption is done before analyze regression data panel model. If there is a misused to assumption, T test and F test which is done become not valid
and statistically can disturb the conclusion that we get.
1. Heteroscedasticity
Heteroscedasticity is happened if variance not constant or unstable. Nachrowi 2006:113, there is some techniques to overcome the
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Heteroscedasticity problem, one of the technique that can be used is with using GLS Generalized Least Square method.
GLS Generalized Least Square method which is the point is giving the existence to data variance which used to square variance from the model so
can be said with using GLS Heteroscedasticity problem can be overcame.
2. Autocorrelation
Autocorrelation happen if disturbance value in certain period related to the earlier value disturbance. The well known test for detect autocorrelation is
test that developed by Durbin Watson, known as statistic d Durbin Watson Gujarati 2007:119. From the rules can be seen in table 3.
Table 3.1 D test Durbin Watson: decided rule
Null Hypothesis Decided
If No Positive Autocorrelation
Reject 0 d dL
No Positive Autocorrelation Neutral
dL d du No Negative Autocorrelation
Reject 4 – dL d 4
No Negative Autocorrelation Neutral
4- du d 4 – dL No PositiveNegative Autocorrelation Not Rejected du d 4 – du
Source : Gurajati, 2007:12
