THE EFFECTS OF FOREIGN INVESTORS TOWARDS LIQUIDITY OF STOCK LISTED IN EMERGING STOCK MARKET: EVIDENCE FROM INDONESIA LQ45 INDEXS

• Main Author: Agasi Danuaji (19015092), Andre
• Format: Final Project
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/25526
• Institution: Institut Teknologi Bandung

The long story of stock market in Indonesia started from 1977 by the operationalization of Jakarta Stock Market until now become Indonesia Stock Market (IDX). As one of the emerging market, the existence of the capital market in Indonesia, especially stock market, is not only important to finance the growth of companies but also to provide economic stability in Indonesia (Rosul, 2002). Nowadays, emerging markets are seems becoming more integrated into the global capital market (Bekaert & Harvey , 1997) with several characteristics which differ from a developed market. Emerging stock market known to be more volatile and less liquid (Peranginangin et al., 2016) and has limited availability of high quality and large capitalization stocks (Kohers et al, 2013). <br /> <br /> Hale (2012) told that emerging market gave many the importance in the world’s economy, and it has grown dramatically in the last 25 years. In other hands, attractive prospects in these markets have renewed the interest of global investors (Bekaert & Harvey , 1997). The existence of the foreign investors believed give effects to the emerging stock market but still debatable among many researchers. <br /> <br /> Therefore, the objective of this study is to understand the effects of foreign ownership on the liquidity of Indonesian companies stock listed in IDX. This study used stocks indexed by LQ45 among the period from march 2015 until February 2018. This study used secondary data from Indonesian Stock Exchange (IDX) and Indonesian Central Securities Depository (KSEI). While to analysis those effect, author employed the panel regression model which determined by the Hausman test to determine either using fixed effect or random effect model. <br /> <br /> The result show that there is no evidence that show foreign ownership affect to liquidity of stocks indexed in LQ45.