Events Study: the Effect of Oil Price Changes in Jokowi's Government to Share Price on Manufacturing Companies Listed in Indonesia Stock Exchange

Fandi Kharisma, Jogiyanto Jogiyanto


The Indonesian government led by Jokowi within 5 months, starting from 18 November 2014 to the beginning of March 2015, had made four significant changes in oil prices. It is the first time in the history of Indonesia in changes of fuel prices in a short time period. Changes in fuel prices are events that are able to influence investment decisions as the rising fuel prices will increase the company's operating costs, thereby it reduces corporate profits. This also applies reverse the decline in fuel that will increase its profits. Changes in corporate profits will affect the response of the capital market, as it will affect investment decisions. The population involved in this study is the company's shares listed on the Indonesia Stock Exchange. Selected samples in the study are the shares belonging to the manufacturing company. The methodology of this research is to analyze the four events of oil price changes to see the abnormal return on the shares of manufacturing companies. This study aims to analyze the effect of the increase and the decline in oil prices on stock price movements on manufacturing company and clarify that the changes in oil prices in a short period of time can affect the reaction of the capital market in Indonesia. Events change in oil prices in general are responded faster before the date of the event which is an average on t-3. This shows that the information about changes in fuel prices has been known to the market fast.

Therefore, the reaction does not need to wait until the time of the incident. 

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