| Summary: | Event study is a study that studying the market reaction to specific event
that the information published as an announcement. Announcing stock repurchase
prior the execution will give effect to the investors, the company and the
management. According to the signaling hypothesis, stock repurchase
announcement is a positive signal that the company has a good level of
profitability. This makes investors assess a company which has good prospects in
the future so that the result of this announcement, the stock price will increase
shareholder wealth ((Battacharya, S. 1979).
This research goal is to see whether the average abnormal return (AAR)
after the company's stock repurchase announcements is higher than before the
announcements. The aim is to test the information content of stock repurchase
announcements. The research was carried out by event study method using a
statistical test t-test. Samples testing are profit companies listed on the Indonesia
Stock Exchange in the period 2004-2011.
The results show average abnormal stock returns after the announcement
of stock repurchase is as a whole based on the results of descriptive statistics
using paired sample t-test, not significantly higher than before the announcement
of stock repurchase from companies listed in Indonesia Stock Exchange in 2004-
2011. Thus, it can be concluded that there was no significant difference in stock
returns before and after the announcement of stock repurchase from companies
listed in Indonesia Stock Exchange in 2004-2011 based on the results of different
test using paired sample t-test.
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