The Effect Analysis of Banking Corporate Bond Issuance Towards the Stock Market Reaction

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