The effect of announcement as the host of XVIII Asian Games on the Indonesian stock market

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In 2014, Indonesia was announced to be the host the 2018 XVIII Asian Games, the biggest sports event in Asia. This announcement is expected to positively impact the country’s economy and investors as there would be thousands of spectators from both the country and overseas. A direct impact of the event is that Indonesia would prepare the entire venue. This study examines whether the capital market participants react to the announcement. For this purpose it tests a total of 25 companies in the infrastructure, utility, and transportation sectors listed on the Indonesia Stock Exchange. A standard event study methodology is employed to examine the existence of abnormal returns around the event. The results show the abnormal returns on two days before and two days after the announcement. However, overall, there are no significant abnormal returns before and after the announcement. The study does not find a significant difference of abnormal returns before and after the announcement. Besides, there was no difference in trading volume activity before and after the announcement as the host of the XVIII Asian Games. In summary, the capital market participants do not consider the event to be a significant issue that determines their investment decision in the capital market.

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    • Figure 1. Event study window
    • Table 1. Sample selection process
    • Table 2. Number of samples in the subsectors
    • Table 3. Statistical description of abnormal returns data
    • Table 4. Statistical description of trading volume activity data
    • Table 5. Summary of first hypothesis testing results
    • Table 6. Summary of second hypothesis testing results
    • Table 7. Summary of third hypothesis testing results
    • Conceptualization
      Andreas
    • Data curation
      Andreas, Tatang Ary Gumanti, Uliya Nurjannah, Intan Nurul Awwaliyah
    • Formal Analysis
      Andreas, Tatang Ary Gumanti, Uliya Nurjannah, Intan Nurul Awwaliyah
    • Funding acquisition
      Andreas
    • Investigation
      Andreas, Tatang Ary Gumanti
    • Methodology
      Andreas, Tatang Ary Gumanti, Uliya Nurjannah, Intan Nurul Awwaliyah
    • Project administration
      Andreas, Uliya Nurjannah, Intan Nurul Awwaliyah
    • Supervision
      Andreas, Tatang Ary Gumanti
    • Visualization
      Andreas, Tatang Ary Gumanti, Uliya Nurjannah, Intan Nurul Awwaliyah
    • Writing – original draft
      Andreas
    • Writing – review & editing
      Andreas, Tatang Ary Gumanti