Abstract
The negative global sentiment, Corona Virus Disease 2019 (COVID-19) caused several listed companies in Indonesia to conduct a stock repurchase in the hope of maintaining and increasing the company's stock price. The research objective is to analyze the effect of stock repurchase announcements on market reactions that are reflected in abnormal return and trading volume activity in 2015-2019 as a guide for companies to make decisions in the present and the future regarding the same issue. This research uses a sample of 64 companies listed on the Indonesia Stock Exchange (IDX) during the observation period. This study uses the event study method with the significance of the hypothesis test of 0.05. The results showed that there is no significant difference between before and after stock repurchase announcements for both variables. This is caused by the presence of negative sentiment throughout the observation period such as the Brexit tragedy, elections in the US won by Donald Trump, and the issue of the trade war by the US-China, this makes the market does not yet have full trust in the Indonesian capital market. Based on the results of the study, it can be concluded that the stock repurchase announcement did not have a significant effect on the market reaction.
Highlights
Rapid economic competition nowadays requires companies to be more creative in finding opportunities
H0 is failed to be rejected, this means there is no significant difference between trading volume activity before the stock repurchase announcement and trading volume activity after the stock repurchase announcement
Based on the abnormal return variable, this research confirms that there is no significant difference between the abnormal return before the stock repurchase announcement and the abnormal return after the stock repurchase announcement
Summary
Rapid economic competition nowadays requires companies to be more creative in finding opportunities. Companies that have shared ownership with the public require management to work professionally. In this way, the company will provide good information to the public. The company will provide good information to the public This information can be a signal that one of them affects the stock price either positively or negatively on the stock market. The stock repurchase is one of the corporate actions that repurchase shares that have been offered to the public. Stock repurchase becomes a stock price stabilization solution due to the influence of undervalued stock prices because stock repurchase conducted by the company or issuer will result in an increase in earnings per share (EPS) of share ownership by the public and intended to make a profit for shareholders when the shares price increase
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