Abstract
The market capitalization of finance sector stock was dominated by the stock of the banking subsector up to 91,87%. The tendency of Indonesian companies to issued corporate bonds is also high. The banking subsector has dominated 38,52 % of the corporate bond market in Indonesia. This research aimed to analyze the development of the stock and corporate bond markets in the banking subsector of Indonesia from 2013 to 2017, analyzing the effects of the corporate bond issuance events towards the prices and the abnormal stock returns, as well as the analysis of the internal and external factors towards the prices of the stock in banks listed in the IDX from 2013 to 2017. This research showed that the stock and bond markets in the banking subsector of Indonesia had experienced growth from 2013 to 2017. Based on the results of partial regression, the announcement of issuance of corporate bonds, dividends per share, NIM and the exchange rate of rupiah to USD had a significant influence on stock prices and the form of influence was positive. NPL, DER, CAR, BI Rate and inflations had significant effects on prices stocks and the forms of influence were negative. Furthermore, the results of paired sample t-test indicated a significant negative abnormal return on H-1 and a significant positive abnormal return on H = 0 announcement of the bond issuance. Keywords : Corporate bonds, stock price, abnormal stock return, event study, internal factor, external factor DOI : 10.7176/RJFA/10-14-10 Publication date :July 31 st 2019
Highlights
A company is established with the aim of earning profits and maintaining the continuity of the company's business activities
This study found that the bond market in the banking subsector in Indonesia generally experienced a growth, reflected in the increase in the number of bond issuing banks from 6 banks in 2013 to 15 banks in 2017 and the bonds nominal increased around 29.36% from 2013 to 2017
In 2017, the number of issuing banks increased but the issued bond values decreased by 18.55%, which could be occurred by several factors, one of which was the inflation and exchange rate rupiah to USD which increased in 2017, as well as the plan to increase interest rates of The Fed, as stated in a research by Graham and Harvey (2001) that bond issuance occurred more often when interest rates were relatively low
Summary
A company is established with the aim of earning profits and maintaining the continuity of the company's business activities. Based on the 2017 IDX data above, the financial market share capitalization was dominated by banking subsector stocks around 91.87%, indicating that the stock price and the number of bank stocks circulating in the market were high. Ang (1997) theorized that the market capitalization value was the stock market price multiplied by the number of outstanding stocks. Another alternative source of external funding for companies was bonds, as from 2013 to 2017, the tendency of companies to issue corporate bonds in Indonesia was very high, based on the trend of an increase in the outstanding corporate bonds from 2013 to 2017 in figure 2
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