Abstract:
This research aims to determine the information in the form of dividends provides
positive or negative reactions to the market as indicated by changes in share prices
and the formation of share prices based on market reactions. Researchers use
abnormal returns as an indicator in measuring market reactions to dividend
announcements. this research uses time series sampling technique to capture the
temporal dynamics surrounding key events. The sample used in this research is all
the stock price before, during, after dividend announcements until one day before
right issue of PT Midi Utama Indonesia in 2023. The results of this research show
that there are differences in abnormal returns before and after the dividend
announcement. Average Abnormal Return before the dividend announcement
indicates the market reaction before the dividend was negative and Average
Abnormal Return after the dividend announcement indicates the market reaction
after the dividend was positive. Positive market reaction after dividend
announcement shows that investors respond to the event by increasing share prices,
so dividend announcements influence the formation of rights issue share prices.
