Corporate’s Action and Market’s Reaction in Indonesia Stock Exchange

Abstract

This study aims to determine differences in abnormal return and trading volume activity before and after the rights issue. The research method used is an event study using comparative studies on companies that conduct rights issues. The population in this study as many as 89 companies and the number of research samples as many as 26 companies with criteria for sampling by purposive sampling method for companies that conduct rights issues on the IDX 2015 to 2018. The data analysis technique is using a paired sample t-test and Wilcoxon Signed Rank Test. The results of data analysis showed no difference in abnormal returns before and after the announcement of the rights issue. However, there are differences in trading volume activity before and after the announcement of the rights issue because some investors use the right ¬ to retain the proportion of their share ownership and the right that is released by investors to the market causing stock trading activities by new investors. The suggestion in this research is that investors should not make the announcement of the rights issue as a consideration for investment decision making.