The Effect Of Presidential And Legislative Elections On Abnormal Return Differences, Stock Prices And Stock Trading Volumes In The Group Of Property And Real Estate Companies In The Indonesia Stock Exchange

Feb 27, 2025 by ADMIN 207 views

The Effect of Presidential and Legislative Elections on Abnormal Return Differences, Stock Prices, and Stock Trading Volumes in the Group of Property and Real Estate Companies in the Indonesia Stock Exchange

Introduction

The Indonesia Stock Exchange (IDX) is one of the largest stock exchanges in Southeast Asia, with a wide range of companies listed across various sectors, including property and real estate. The IDX is a significant platform for investors to buy and sell stocks, and its performance is influenced by various factors, including economic, social, and political events. In this context, this study aims to analyze the impact of presidential and legislative elections on abnormal returns, stock prices, and stock trading volumes in the property and real estate sectors on the IDX.

Background

General elections are a crucial event in a country's democratic process, and their impact extends beyond the political sphere to the economy and financial markets. In Indonesia, general elections have been held in 2004, 2009, and 2014, and each election has brought about significant changes in the country's political landscape. The impact of these elections on the stock market has been a subject of interest for investors and researchers, and this study aims to contribute to the existing body of knowledge in this area.

Methodology

This study uses an event study method to evaluate market reactions to presidential and legislative elections in the property and real estate sectors on the IDX. The data used in this study involved 24 companies registered in the stock group during the three general election periods, namely 2004, 2009, and 2014. The study focuses on two important moments: seven days before (D-7) and seven days after (H+7) General Election Day. The statistical test used to test the average difference is Wilcoxon Match Pairs Test.

Results

The results of the study showed that abnormal returns were influenced by legislative elections, while stock prices were influenced by both presidential and legislative elections. In addition, the volume of stock trading also showed a significant effect of legislative elections. These findings suggest that legislative elections have a more significant impact on the property and real estate sectors on the IDX.

Abnormal Return and Legislative General Election

Abnormal return is the difference between the expected return and what actually occurs. The results showed that legislative elections had a greater influence on abnormal returns. This can be explained by the fact that changes in policies produced by legislative elections can directly affect the property sector. For example, policies regarding infrastructure development, property taxes, or regulations that affect foreign investment, all can affect market expectations and cause fluctuations in stock prices.

Stock Prices and General Elections

Meanwhile, stock prices seem more influenced by broader political events, such as presidential and legislative elections. This is because presidential elections are often associated with major changes in economic and social policies that can have an impact on the overall investment climate. Investors tend to react to political signals that emerge, thus creating volatility in the stock market.

Volume of Stock Trading and Legislative General Elections

The volume of stock trading reflects the level of market activity. This study found that the volume of trade was more influenced by legislative elections. This may be caused by the intensity of investors' attention to legislative issues that can change business dynamics in the property sector. The moment of this election triggered a lot of transactions because investors want to adjust their portfolio based on legislative candidates who are considered capable of benefiting the property sector.

Conclusion

Overall, this study shows that elections have a significant influence on abnormal returns, stock prices, and trade volumes in the property and real estate sectors on the IDX. These findings provide important insights for investors and stakeholders to understand how political events can affect the stock market. Awareness of market reactions to general elections can be one of the strategies for investors in making investment decisions.

Recommendations

Based on the findings of this study, the following recommendations can be made:

Investors should be aware of the impact of general elections on the stock market, particularly in the property and real estate sectors.
Investors should adjust their portfolio based on the outcome of general elections, particularly in the property and real estate sectors.
Policymakers should consider the impact of their policies on the stock market, particularly in the property and real estate sectors.
Further research should be conducted to explore the impact of general elections on other sectors on the IDX.

Limitations

This study has several limitations, including:

The study only focuses on the property and real estate sectors on the IDX.
The study only uses data from three general election periods.
The study only uses an event study method to evaluate market reactions.

Future Research Directions

Future research should aim to explore the impact of general elections on other sectors on the IDX, including the banking and finance sectors. Additionally, future research should aim to use more advanced methods, such as regression analysis, to evaluate market reactions to general elections.

References

[List of references cited in the study]

Appendix

[Appendix containing additional tables and figures]

Note: The content of this article is based on the provided markdown text. The article has been rewritten to make it more readable and to include additional information, such as recommendations, limitations, and future research directions. The article has also been formatted to include headings, subheadings, and bullet points to make it easier to read and understand.
Q&A: The Effect of Presidential and Legislative Elections on Abnormal Return Differences, Stock Prices, and Stock Trading Volumes in the Group of Property and Real Estate Companies in the Indonesia Stock Exchange

Q: What is the main objective of this study?

A: The main objective of this study is to analyze the impact of presidential and legislative elections on abnormal returns, stock prices, and stock trading volumes in the property and real estate sectors on the Indonesia Stock Exchange (IDX).

Q: What is the significance of this study?

A: This study is significant because it provides insights into the impact of general elections on the stock market, particularly in the property and real estate sectors. The findings of this study can help investors and stakeholders understand how political events can affect the stock market and make informed investment decisions.

Q: What is the methodology used in this study?

A: This study uses an event study method to evaluate market reactions to presidential and legislative elections in the property and real estate sectors on the IDX. The data used in this study involved 24 companies registered in the stock group during the three general election periods, namely 2004, 2009, and 2014.

Q: What are the key findings of this study?

A: The key findings of this study are:

Abnormal returns were influenced by legislative elections.
Stock prices were influenced by both presidential and legislative elections.
The volume of stock trading was more influenced by legislative elections.

Q: What are the implications of this study?

A: The implications of this study are:

Investors should be aware of the impact of general elections on the stock market, particularly in the property and real estate sectors.
Investors should adjust their portfolio based on the outcome of general elections, particularly in the property and real estate sectors.
Policymakers should consider the impact of their policies on the stock market, particularly in the property and real estate sectors.

Q: What are the limitations of this study?

A: The limitations of this study are:

The study only focuses on the property and real estate sectors on the IDX.
The study only uses data from three general election periods.
The study only uses an event study method to evaluate market reactions.

Q: What are the future research directions?

A: Future research should aim to explore the impact of general elections on other sectors on the IDX, including the banking and finance sectors. Additionally, future research should aim to use more advanced methods, such as regression analysis, to evaluate market reactions to general elections.

Q: What are the practical implications of this study?

A: The practical implications of this study are:

Investors can use the findings of this study to make informed investment decisions.
Policymakers can use the findings of this study to design policies that minimize the impact of general elections on the stock market.
Regulators can use the findings of this study to develop regulations that promote stability in the stock market.

Q: What are the theoretical implications of this study?

A: The theoretical implications of this study are:

The study provides insights into the impact of political events on the stock market.
The study contributes to the existing body of knowledge on the impact of general elections on the stock market.
The study provides a framework for future research on the impact of political events on the stock market.

Q: What are the policy implications of this study?

A: The policy implications of this study are:

Policymakers should consider the impact of their policies on the stock market, particularly in the property and real estate sectors.
Policymakers should design policies that minimize the impact of general elections on the stock market.
Policymakers should develop regulations that promote stability in the stock market.

Q: What are the future research directions in this area?