Political Connection, Family Ownership, and Stock Performance after IPOs: Evidence from Indonesia
DOI:
https://doi.org/10.26740/jaj.v18n1.p1-16Keywords:
Family Ownership; IPO Company; Political Connections; Signaling Theory; Stock PerformanceAbstract
Background Problems: Indonesia leads Association of Southeast Asian Nations (ASEAN) countries in terms of the number of Initial Public Offerings (IPOs) since 2018, peaking in 2023 with 79 companies conducting IPOs. Despite being the highest in ASEAN, not all IPO stocks in Indonesia are of good quality and performance. Introduction/Main Objectives: This research seeks to examine the impact of political connection and family ownership on the stock performance of firms that executed IPOs in Indonesia from 2018 to 2020 over the subsequent three years after companies go pubic (2021-2023). Research Methods: The stock performance analysis covers 12, 24, and 36 months after the company's IPO to examine long-term performance. This study’s sample comprises 125 firm. Multiple linear regression analysis was used to test the hypotheses. Finding: This study finds that political connections positively influence stock performance, whereas family ownership does not impact stock performance. Conclusion: This study an serve as a reference for companies in making decisions regarding the composition of commissioners and boards of directors with political connections, which may act as a positive signal to investors. The results of this research may also function as aguidance for investors to determine the best investment decisions.
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