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Stock Returns of Politically Connected Firms and Politically Unconnected Firms in Indonesia
Wilman San Marino (a*), Nugraha (b)

(a) Universitas Pendidikan Indonesia
Jl. Dr Setiabudi No 229 40154 Indonesia
(b) Universitas Pendidikan Indonesia
Jl. Dr Setiabudi No 229 40154 Indonesia


Since the democratic reform era in Indonesia, many entrepreneurs have entered the world of practical politics. Entrepreneurs occupy various strategic positions in party management and even occupy positions in both the legislative and executive branches in Indonesia, so that firms emerge with political connections. This study aims to determine the factors that influence the stock return of politically connected firms and politically not connected firms in Indonesia after the reform era. The research method is explanatory research methods and using the Fama and French five-factor pricing model. The data used are secondary data originating from listed firms on the Indonesia Stock Exchange in a period of 20 years, starting from 1998 to 2018. The results of the study show that the stock returns politically connected firms are significantly affected by market risk, profitability and investment while stock returns politically unconnected firms are significantly influenced by size, value factor, profitability, investment.

Keywords: politically connected firm, stock return, Fama-French five-factor model

Topic: Financial Management and Accounting


Conference: The 4th Global Conference on Business, Management and Entrepreneurship (GCBME 2019)

Plain Format | Corresponding Author (Wilman San Marino)

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