Market Reaction on the Information of Related Party Transaction Disclosure

Abstract

This study tries to assess and analyze the content of information on the disclosure of related party transaction carried out by public companies in Indonesia Stock Exchange measured based on abnormal return of stock. This event study on 409 companies listed in Indonesia Stock Exchange in 2014 assesses the content of transaction information of related parties. The result of this research shows that related party transaction does not affect the abnormal return of stock. It shows the absence of information content in the disclosure of related party transaction done by companies. Market does not react on the disclosure of such transaction, where investors do not use such information, which is published in annual reports, for making decisions.