MARKET REACTIONS TO DIVIDEND ANNOUNCEMENTS ON THE FORMATION OF SHARE PRICES IN THE CONTEXT OF PT MIDI UTAMA INDONESIA'S RIGHTS ISSUE

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.