Market Reaction Toward the Announcement of Domestic Market Obligation for Coal Price

International Journal of Economics and Management Studies

© 2020 by SSRG - IJEMS Journal

Volume 7 Issue 2

Year of Publication : 2020

Authors : Reynaldi Prasetyo , Mahatma Kufepaksi , Sri Hasnawati

10.14445/23939125/IJEMS-V7I2P122

How to Cite?

Reynaldi Prasetyo , Mahatma Kufepaksi , Sri Hasnawati, "Market Reaction Toward the Announcement of Domestic Market Obligation for Coal Price," SSRG International Journal of Economics and Management Studies, vol. 7,  no. 2, pp. 151-154, 2020. Crossref, https://doi.org/10.14445/23939125/IJEMS-V7I2P122

Abstract:

This paper compares the impact of Domestic Market Obligation (DMO) on stock returns for coal mining company stocks for 10 event-days on March 2018. The study computes abnormal returns for 19 mining companies using event study methodology and Trading Volume Activity to prove information content of Domestic Market Obligation for Coal Price. The result shows that this event has information content, which caused the Indonesian capital market to react to the event. The number of Abnormal Returns that occurred in the window period was 4 times. Although the capital market seems to react, the capital market does not significantly provide Abnormal Returns when the DMO policy takes place. However, Trading Volume Activity before and after the announcement of the DMO policy showed a significant change in the significance level of 5%.

Keywords:

Domestic Market Obligation (DMO), Event Study, Trading Volume Activity

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