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Stock price reaction when Covid -19 exist: moderating by firm’s operating cash flow

COVID-19 has been declared a global pandemic by the WHO, rendering the stock markets volatile. Investors predict that the pandemic can be a threat to a company's cash flow, whereas managers use the last year’s financial condition to defend their stock price. We evaluate whether the company&...

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Main Authors: Nugroho, Dwiyanjana Santyo, Pertiwi, Meilani Intan
Format: Article
Language:English
Published: Penerbit Universiti Kebangsaan Malaysia 2021
Online Access:http://journalarticle.ukm.my/17272/1/jeko_55%281%29-5.pdf
http://journalarticle.ukm.my/17272/
https://www.ukm.my/fep/jem/content/2021-1.html
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spelling my-ukm.journal.172722021-08-06T02:42:57Z http://journalarticle.ukm.my/17272/ Stock price reaction when Covid -19 exist: moderating by firm’s operating cash flow Nugroho, Dwiyanjana Santyo Pertiwi, Meilani Intan COVID-19 has been declared a global pandemic by the WHO, rendering the stock markets volatile. Investors predict that the pandemic can be a threat to a company's cash flow, whereas managers use the last year’s financial condition to defend their stock price. We evaluate whether the company's operating cash flow moderates the company's financial condition and stock price reactions, in addition to making a comparison between the period before and during the COVID-19 pandemic using Difference in Difference. The regression analysis model used is a random effect model. The objects of this research are the hotel, tourism, restaurant, and retail trade sub-sector companies in the first quarter and second quarter of 2020, and 2019 and 2018 annually. We found that none of the firm's financial condition affected the stock's price reaction. We also found that operating cash flow strengthens the relationship between cash and ROA to the stock price. The results of this study further imply that the COVID-19 pandemic caused a significant stock price reaction when compared between the time before and during the COVID-19 disaster in Indonesia. The current study is hoped to contribute towards supporting the government in formulating policies to stimulate the currently-slumping economy. This study can also assist the investors in preparing their analysis to determine whether what action they should take in regards to their stocks, considering that our research implicitly reflects the development of conditions in several industrial sectors. Penerbit Universiti Kebangsaan Malaysia 2021 Article PeerReviewed application/pdf en http://journalarticle.ukm.my/17272/1/jeko_55%281%29-5.pdf Nugroho, Dwiyanjana Santyo and Pertiwi, Meilani Intan (2021) Stock price reaction when Covid -19 exist: moderating by firm’s operating cash flow. Jurnal Ekonomi Malaysia, 55 (1). pp. 1-16. ISSN 0127-1962 https://www.ukm.my/fep/jem/content/2021-1.html
institution Universiti Kebangsaan Malaysia
building Tun Sri Lanang Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Kebangsaan Malaysia
content_source UKM Journal Article Repository
url_provider http://journalarticle.ukm.my/
language English
description COVID-19 has been declared a global pandemic by the WHO, rendering the stock markets volatile. Investors predict that the pandemic can be a threat to a company's cash flow, whereas managers use the last year’s financial condition to defend their stock price. We evaluate whether the company's operating cash flow moderates the company's financial condition and stock price reactions, in addition to making a comparison between the period before and during the COVID-19 pandemic using Difference in Difference. The regression analysis model used is a random effect model. The objects of this research are the hotel, tourism, restaurant, and retail trade sub-sector companies in the first quarter and second quarter of 2020, and 2019 and 2018 annually. We found that none of the firm's financial condition affected the stock's price reaction. We also found that operating cash flow strengthens the relationship between cash and ROA to the stock price. The results of this study further imply that the COVID-19 pandemic caused a significant stock price reaction when compared between the time before and during the COVID-19 disaster in Indonesia. The current study is hoped to contribute towards supporting the government in formulating policies to stimulate the currently-slumping economy. This study can also assist the investors in preparing their analysis to determine whether what action they should take in regards to their stocks, considering that our research implicitly reflects the development of conditions in several industrial sectors.
format Article
author Nugroho, Dwiyanjana Santyo
Pertiwi, Meilani Intan
spellingShingle Nugroho, Dwiyanjana Santyo
Pertiwi, Meilani Intan
Stock price reaction when Covid -19 exist: moderating by firm’s operating cash flow
author_facet Nugroho, Dwiyanjana Santyo
Pertiwi, Meilani Intan
author_sort Nugroho, Dwiyanjana Santyo
title Stock price reaction when Covid -19 exist: moderating by firm’s operating cash flow
title_short Stock price reaction when Covid -19 exist: moderating by firm’s operating cash flow
title_full Stock price reaction when Covid -19 exist: moderating by firm’s operating cash flow
title_fullStr Stock price reaction when Covid -19 exist: moderating by firm’s operating cash flow
title_full_unstemmed Stock price reaction when Covid -19 exist: moderating by firm’s operating cash flow
title_sort stock price reaction when covid -19 exist: moderating by firm’s operating cash flow
publisher Penerbit Universiti Kebangsaan Malaysia
publishDate 2021
url http://journalarticle.ukm.my/17272/1/jeko_55%281%29-5.pdf
http://journalarticle.ukm.my/17272/
https://www.ukm.my/fep/jem/content/2021-1.html
_version_ 1707766998802366464
score 13.211869

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