IV. Result and Analysis
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 Group) and Anthony Salim (Salim Group), three lists of supporters and eight list of ministry in the cabinet. In addition, we eliminate 1 relisting firms and 2 listed firms which are not liquid traded during the event window. From these results, the final results of politically connected winning are 37 lists of firms who support Joko Widodo – Jusuf Kalla in presidential election 2014. Figure 2 Politically Connected Winning Firms Coalition Based on Figure 2, 73% equal to 28 firms comes from conglomeration business firms who supported Joko Widodo – Jusuf Kalla. …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 below: Politically Connected Losing Firms On the findings of the other candidate, which is Prabowo Subianto - Hatta Rajasa, we identified that Koalisi Merah Putih (KMP) is supported by three business conglomerates which are Aburizal Bakrie (Bakrie Group), Hary Tanoesoedibjo (MNC Group), and Sandiaga S. Uno (Saratoga Group). Besides, owner of each conglomerate participate as member of successor on winning team Prabowo Subianto – Hatta Rajasa. Of the 24 stocks that are identified, we eliminate 5 suspended and 2 illiquid listed firms during the event window. The final sample is 17 politically connected losing firms who support Prabowo Subianto – Hatta Rajasa in presidential election 2014. Figure 3 Politically Connected Losing Firms Coalition Based on Figure 3, both of conglomeration business and successor team supported Prabowo - Hatta in presidential election 2014 in equal percentage. The conglomerations business who supports Prabowo – Hatta declared themselves clearly as successor team to win the presidential election, while in Joko Widodo – Jusuf Kalla case this is not really stated. The list of the companies could be seen in Table 3 below: Event Window Figure 4 Comparison of CAR for politically connected winning firms (WIN) and losing firms (LOSE) around the announcement of the presidential election polling result. Figure 4 plot the different pattern of Cumulative Abnormal Return (CAR) of the two groups in 2014 presidential election announcement polling result. The graph shows that 6 days in the (LOSE) pre-event period politically connected winning firms (WIN) have lower CAR fall to -1.90% than politically connected losing firms which increase 1.92% with statistically significant. It indicates that investors are pessimistic that the winning parties would win the election. In contrast, losing parties which have been supported by the big coalition of 63% of parliament compare to winning parties of 37% are optimistic to win the elections. Furthermore, in the event period losing parties experienced a decline in CAR until the announcement poll date …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
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 Group) and Anthony Salim (Salim Group), three lists of supporters and eight list of ministry in the cabinet. In addition, we eliminate 1 relisting firms and 2 listed firms which are not liquid traded during the event window. From these results, the final results of politically connected winning are 37 lists of firms who support Joko Widodo – Jusuf Kalla in presidential election 2014. Figure 2 Politically Connected Winning Firms Coalition Based on Figure 2, 73% equal to 28 firms comes from conglomeration business firms who supported Joko Widodo – Jusuf Kalla. …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 below: Politically Connected Losing Firms On the findings of the other candidate, which is Prabowo Subianto - Hatta Rajasa, we identified that Koalisi Merah Putih (KMP) is supported by three business conglomerates which are Aburizal Bakrie (Bakrie Group), Hary Tanoesoedibjo (MNC Group), and Sandiaga S. Uno (Saratoga Group). Besides, owner of each conglomerate participate as member of successor on winning team Prabowo Subianto – Hatta Rajasa. Of the 24 stocks that are identified, we eliminate 5 suspended and 2 illiquid listed firms during the event window. The final sample is 17 politically connected losing firms who support Prabowo Subianto – Hatta Rajasa in presidential election 2014. Figure 3 Politically Connected Losing Firms Coalition Based on Figure 3, both of conglomeration business and successor team supported Prabowo - Hatta in presidential election 2014 in equal percentage. The conglomerations business who supports Prabowo – Hatta declared themselves clearly as successor team to win the presidential election, while in Joko Widodo – Jusuf Kalla case this is not really stated. The list of the companies could be seen in Table 3 below: Event Window Figure 4 Comparison of CAR for politically connected winning firms (WIN) and losing firms (LOSE) around the announcement of the presidential election polling result. Figure 4 plot the different pattern of Cumulative Abnormal Return (CAR) of the two groups in 2014 presidential election announcement polling result. The graph shows that 6 days in the (LOSE) pre-event period politically connected winning firms (WIN) have lower CAR fall to -1.90% than politically connected losing firms which increase 1.92% with statistically significant. It indicates that investors are pessimistic that the winning parties would win the election. In contrast, losing parties which have been supported by the big coalition of 63% of parliament compare to winning parties of 37% are optimistic to win the elections. Furthermore, in the event period losing parties experienced a decline in CAR until the announcement poll date …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