IMPACT OF POLITICAL EVENTS ON STOCK MARKET PERFORMANCE: EVIDENCE FROM INDONESIA IN 2012-2017

Abstract

Capital markets play an important role in the economy field. The rapid growth of the capital market can contribute to the economic growth of a country. This could help in increasing productivity in the economy. However, the capital market can be affected by several factors such as political events. This study aims to analyze the impact of political events on stock market performance: evidence from Indonesia in 2012-2017. In this study, political events are divided into 3 categories, namely Election Events, Corruption Cases, and Political Figures Cases. The sample used in this study are LQ45 stocks listed Indonesia Stock Exchange (IDX). The data are taken from Mandiri Sekuritas website. The results of the study indicate that election events, corruption cases, and political figures cases have insignificant impact with the error level 10%. If summed up in general, political events also have insignificant impact. The researcher used event study method and EVIEWS software for calculation.