RESPONSE INVESTOR TO THE SPECIFIC CAPITAL EXPENDITURE: CASE STUDIES IN THE BANKING SECTOR

Juniarti, and Toly, Agus Arianto (2021) RESPONSE INVESTOR TO THE SPECIFIC CAPITAL EXPENDITURE: CASE STUDIES IN THE BANKING SECTOR. In: Eurasia Business and Economics Society , 08-10-2021 - 08-10-2021, Berlin - Germany.

Abstract

The topic of investor response to capital expenditure is still quite limited, especially those related to the types of capital expenditure. This study aims to test whether the market responds differently to each type of capital expenditure announcement. To get better results, this study uses a specific industry, namely banking which in previous studies was often not included as a sample for reasons of the specificity of the report form. All banks that went public on the Indonesia Stock Exchange and met the research criteria were selected as samples. There are 39 eligible companies, so in total during the 205-2019 period, there are 169 observations. The findings of this study are (1) on average, the share return of companies that make capital expenditure announcements, whether asset expenditure, mergers/acquisitions and opening new branches, is higher than the control sample, (2) the market responds positively to acquisitions and mergers, while assets expenditure is not significant, and the opening of a new branch has received a negative response. This research contributes to broadening the generalizability of the results by conducting research in specific industries where the results are in line with results in other sectors. One of the important managerial implications in this study is the managers caution in choosing capital expenditure activities, so that the signal for value creation from these activities is captured by the market.

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