Market Reaction on Reverse Stock Split Announcement: Empirical Evidence in Indonesian Stock Market

Effects of corporate actions on market dynamics during the COVID-19 pandemic: An event study on the Indonesia Stock Exchange

“…This dichotomy within the Indian market indicates a complex and divided investor reaction towards stock splits. Concurrently, Hendra et al (2021) on the Bursa Efek Indonesia reported significant positive effects, aligning with the favourable outlook in Indonesian markets. Rohit et al (2016) also contributed to this nuanced picture by reporting a positive, albeit statistically insignificant, effect on the BSE.…”

“…The analysis of stock splits reveals a similarly nuanced picture. While favourable responses are noted in markets such as the Shanghai Stock Exchange, the Indonesia Stock Exchange, and the Bombay Stock Exchange (BSE) -with studies by Titman et al (2020), Muna & Khaddafi (2022), Nagendra (2018), Nagendra &Babu (2019), andHendra et al (2021) documenting positive market reactions -the Indian market exhibits a more complex investor response (Patel et al, 2016;Rohit et al, 2016), ranging from significant negativity to inconclusive positivity. This suggests that while stock splits are often interpreted as indicators of company growth or an investor-friendly stance, perceptions can significantly differ based on local market conditions and other factors.…”

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“…(3) Among the shocks that affected information asymmetry, the abnormal returns had a positive and insignificant effect on the information asymmetry. (Hendra, Lesmana, & Sabrina, 2021) investigated stock return behaviour on days before and after reverse stock split events announcements on an Indonesian stock exchange between 2002 and 2018. Their study result revealed positive abnormal returns before the announcement, followed by negative abnormal returns after the announcement.…”

Corporate Financial Strategy in an Emerging Market: Evidence from Indonesia

“…This is due to the increasing role of financial strategy in companies, especially in developing countries (Kostini and Raharja 2019;Pochitaev and Filippova 2016;Pochitaev et al 2014). Previous studies have mainly focused on financial strategies related to investment (Yaghoubi and Keefe 2022;Gu and Zhang 2022); dividends (Trinh et al 2022;Ali 2022); mergers and acquisitions (Plaksinaa et al 2019;Gao and Bao 2022;Yang et al 2019;Wang et al 2021); stock splits (Podgórski and Pasierbek 2020;Hendra et al 2020); and leveraged buyouts (Ayash and Rastad 2021;Chiarella and Ostinelli 2020;Bertoni et al 2020). Financial strategy looks at the financial impact of strategic decisions at the corporate and business level and identifies the best financial actions.…”