Etty Indriani



The study addressed to: (1) investigated the market reaction toward right issue announcement;(2)
gave an empirical evidence of association of stock market reaction with firm’s operational performance in
the future; (3) examined specific variables of right issue s that might explain the reaction of the stock
market at the announcement and the operational performance of firms in the future. Result shows that
the Indonesian stock market gave negative reaction on the third and fourth days after the right issue
announcement. So the stock market had late caught the information. Further, the firms did the right
issue s gained higher operating performance level in the second and third year than average level in the
terms of firm operating performance in the same industry that did not do the right issue . The changes of
firm’s operating performance in the future tend to the positive change. The issue-price was the specific
variable of the right issue that influenced positively on the abnormal return. Meanwhile, the issue-price
negatively affected on the future firm’s operating performance. In the empirical evidence equity right issue
s, the stock market reaction might to anticipate the change of the future firm’s operating performance
through the specific variable issue-price with opposite direction


the ability of stocks market; firm’s operational performance; right issue

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