Abstract
The purpose of this study is to examine the market reaction regarding the announcement of working cabinet following the election of Jokowi as the President of Indonesia. Political events such as presidential election, government change, cabinet announcement, and other events are very influential towards price and trade volume at the stock exchange since the political events are closely related to the state economy stability. The Sample in this study is stock which was listed as issuers in Indonesia Stock Exchange (IDX) which included in LQ45 company group during this research period from 20 October– 3 November 2014. The result shows that there was significant effect towards abnormal return difference before and after the cabinet announcement on the companies listed in LQ 45. The existence of this significant difference means that market reacted with the cabinet announcement event.
Highlights
Capital market is the place for companies to improve their long term needs by selling stock or issuing bond (Jogiyanto, 2003)
The sample which meets the criteria was as follows: (1) stock which was listed as issuers in Indonesia Stock Exchange (IDX) which included in LQ 45 company group during this research period from 20 October – 3 November 2014, (2) actively traded during research period, (3) the stock data required were available for the research and (4) the company was absent in performing any corporate action like right issue, warrant, bonus share, stock dividend, and conversion option during the research period
Based on the discussions done in the previous chapters, this research which aims to examine abnormal return, security return variability, and trade volume activity differences before and after the Working Cabinet announcement event concluded that the unavailability of abnormal return difference before and after the cabinet announcement since the significance score was at 0.000 which was below the determined probability level ɑ at 0.05
Summary
Capital market is the place for companies to improve their long term needs by selling stock or issuing bond (Jogiyanto, 2003). Two pairs of candidates passed the verification stage, they were Prabowo Subiyanto with Hatta Radjasa and Joko Widodo with Jusuf Kalla. After the simultaneous general election all over Indonesia, Joko Widodo and Jusuf Kalla has chosen as the elected President and Vice President of the Republic of Indonesia for 2014-2019 period with 53.15 percent votes defeating the number one pair candidate Prabowo Subiyanto and Hatta Radjasa with 46.85 percent (KPU). After being pledged as the President of the Republic of Indonesia, President Joko Widodo has to announce his cabinet with ministers that will assist him in doing the duties. After being announced on 27 October 2014, the Working Cabinet was filled with 34 ministers composition consisted of 21 professionals (nonparty) and 13 from the political party
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