CORPORATE ACTION, SHARE PRICES, RANDOM EFFECT MODEL APPROACH

Abstract

Corporate action is a common thing on the IDX. The study verified the effects of corporate action on stock prices with the objective of issuers performing on rights issues, cash dividends, stock splits and acquisitions listed on the IDX during 2016-2019. The secondary data employed were 57 samples and the sampling technique was the purposive one. Hypothesis testing utilized a panel regression model approach with STATA 16.0 software. The results were that right issue, cash dividends and stock split had significant effects on the stock prices, except for acquisition. The results are worthwhile for financial science, particularly the corporate action theory and also for the company managers to choose the type of corporate action that can affect stock prices. It is also beneficial for shareholders or investors since companies that carry out corporate actions do not always bring positive aspects or benefits