Politically Connected Firms
Based on in-depth research, we managed to identify a list of stocks that have linked to political parties and leadership. Since in the election in 2014 there are two candidates we divided into Political Winning (Ir. Joko Widodo- M. Jusuf Kalla) and Political Lose (Prabowo Subianto - Hatta Rajasa). As a result, there are a total of 54 firms were identified over a test period of the presidential election in 2014 as politically connected. Politically Connected Winning Firms
Based on our data, Joko Widodo and Jusuf Kalla as Koalisi Indonesia Hebat (KIH) are supported by four business conglomerate which are Edward Soeryadjaja (Astra Group), Robert Budi Hartono (Djarum Group) James Riady (Lippo …show more content…
Then, in second position 22% or amount 8 firms derived from list of ministers in cabinet, and rest of 5% taken from successor team. In other words, Joko Widodo – Jusuf Kalla most preferred by businessperson in order to win the presidential election. The list of the companies could be seen in the Table 2 …show more content…
In politically connected winning firms, positive abnormal return happened during period t-12, t-4, t+3, t+6, and t+8 compared to negative abnormal return of t-8 and t+9. Abnormal return at 5 period shows that the stocks members of the politically connected winning firms are reacting to the announcement of the poll result.
In politically connected losing firms, there are more negative than positive abnormal return. The incidence of negative abnormal return occurs at t-10, t-9, t-8, t-6, t-2, t-1, and t+14 compared to positive abnormal return is present on the t-14, t+1 and t+2. The abnormal negative return was caused by the provision of information received by investors about quick count of poll of the presidential election which was held on the date of t-8 or July, 09