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The reaction of capital market towards government decision regarding execution of drugs case: a study of execution period i & II in 2015 and period III in 2016 in index lq45 Indonesia stock Exchange

Author

Listed:
  • ALHAMID USWA

    (University of Brawijaya)

  • SALIM UBUD

    (University of Brawijaya)

  • SUMIATI S.

    (University of Brawijaya)

Abstract

The focus of this study is about event study regarding execution of drugs cases occurred in two periods in 2015 and one period in 2016. The aim of this study is to examine whether there is empirical evidence about reaction of Indonesia capital market regarding government decision about execution in drugs cases by using abnormal return and trading volume activity indicators. Population in this study was all stocks in Indonesia Stock Exchange listing along the period of observation within index LQ45 sample. Data employed in this study consisted of daily stock price and volume of daily stock for five days before the event and five days after the event, within employing paired t-test method. This study found that there was no significant difference of average abnormal return before and after the execution in three periods of observation. On the other side, there was significant difference towards average trading volume activity before and after execution. This result explains that information about execution cannot increase the stock price and there is decrease of stock activity.

Suggested Citation

  • Alhamid Uswa & Salim Ubud & Sumiati S., 2016. "The reaction of capital market towards government decision regarding execution of drugs case: a study of execution period i & II in 2015 and period III in 2016 in index lq45 Indonesia stock Exchange," Russian Journal of Agricultural and Socio-Economic Sciences, CyberLeninka;Редакция журнала Russian Journal of Agricultural and Socio-Economic Sciences, vol. 60(12), pages 218-227.
    • Handle: RePEc:scn:031261:16967684
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