MARKET REACTION ON PT GARUDA INDONESIA DEBT RESTRUCTURING ANNOUNCEMENTS
Abstract
Corporate debt restructuring is a meaningful mechanism for firms in supervising their financial challenges. This study examines the market reaction to debt restructuring announcements by PT Garuda Indonesia, a prominent Indonesian airline facing financial distress. The research employs an event study methodology, analyzing stock price movements 7 days before and after key restructuring announcements. Data was collected from the Indonesia Stock Exchange (IDX). The method employed in this study was the Shapiro-Wilk to test the normality and paired sample t-test to test the hypothesis. The results show a significant difference in stock prices for the announcements on December 30, 2020 and December 29, 2023. These results provide implications that the market can provide a positive response or provide appreciation for corporate debt restructuring events as in the case of PT Garuda Indonesia. This study provides an understanding of market efficiency and the impact of corporate financial strategies related to debt issues that are still rarely found in the literature.
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References
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Shleifer, A. (2000). Inefficient Markets: An Introduction To Behavioural Finance: Oup Oxford.
Truong, N. X., Huong, D. M., & Van Anh, N. T. (2017). Stock Price Reaction To Cash Dividend Announcements In Vietnam. Journal Of Economic Development, 24(2), 74-89. Doi:10.24311/Jabes/2017.24.2.01
Yanagawa, N. (2014). Comments On Part Ii: Unsolved Aspects Of Corporate Governance Problems. In Enterprise Law: Contracts, Markets, And Laws In The Us And Japan (Pp. 172-174).
Zhou, Y., Liu, M., & Peng, D. (2014). Research On Governance And Market Effect Of Listing Corporation Debt Restructuring: Based On The Angle Of Moral Hazard. Paper Presented At The 11th International Conference On Service Systems And Service Management, Icsssm 2014 - Proceeding.
Altman, E. I., Iwanicz‐Drozdowska, M., Laitinen, E. K., Suvas, A., & Accounting. (2017). Financial Distress Prediction In An International Context: A Review And Empirical Analysis Of Altman's Z‐Score Model. Journal Of International Financial Management, 28(2), 131-171.
Asquith, P., Gertner, R., & Scharfstein, D. (1994). Anatomy Of Financial Distress: An Examination Of Junk-Bond Issuers. The Quarterly Journal Of Economics, 109(3), 625-658.
Avrutskaya, S., & Maricheva, E. (2021). Testing Russian Stock Market Efficiency Using Event Studies: Impact Of Credit Ratings Changes. Journal Of Corporate Finance Research, 15(2), 42-54. Doi:10.17323/J.Jcfr.2073-0438.15.2.2021.42-54
Binder, J. (1998). The Event Study Methodology Since 1969. Review Of Quantitative Finance & Accounting, 11, 111-137.
Campello, M., Graham, J. R., & Harvey, C. R. (2010). The Real Effects Of Financial Constraints: Evidence From A Financial Crisis. Journal Of Financial Economics, 97(3), 470-487.
Darmayanti, N., Mildawati, T., & Susilowati, F. D. (2020). Dampak Covid-19 Terhadap Perubahan Harga Dan Return Saham. Ekuitas: Jurnal Ekonomi Dan Keuangan, 4(4), 462-480.
Deangelo, H., Deangelo, L., & Wruck, K. H. (2002). Asset Liquidity, Debt Covenants, And Managerial Discretion In Financial Distress:: The Collapse Of La Gear. Journal Of Financial Economics, 64(1), 3-34.
Ding, W., Levine, R., Lin, C., & Xie, W. (2021). Corporate Immunity To The Covid-19 Pandemic. Journal Of Financial Economics, 141(2), 802-830.
Djankov, S., Hart, O., Mcliesh, C., & Shleifer, A. (2008). Debt Enforcement Around The World. Journal Of Political Economy, 116(6), 1105-1149.
Eugene, F., & French, K. (1992). The Cross-Section Of Expected Stock Returns. Journal Of Finance, 47(2), 427-465.
Fama, E. F. (1970). Efficient Capital Markets: A Review Of Theory And Empirical Work. The Journal Of Finance, 25(2), 383-417.
Fama, E. F., Fisher, L., Jensen, M. C., & Roll, R. (1969). The Adjustment Of Stock Prices To New Information. International Economic Review, 10(1), 1-21.
Febriyanti, G. A. (2020). Dampak Pandemi Covid-19 Terhadap Harga Saham Dan Aktivitas Volume Perdagangan (Studi Kasus Saham Lq-45 Di Bursa Efek Indonesia). Indonesia Accounting Journal, 2(2), 204-214.
Franks, J. R., & Torous, W. N. (1994). A Comparison Of Financial Recontracting In Distressed Exchanges And Chapter 11 Reorganizations. Journal Of Financial Economics, 35(3), 349-370.
Gilson, S. C., John, K., & Lang, L. H. (1990). Troubled Debt Restructurings: An Empirical Study Of Private Reorganization Of Firms In Default. Journal Of Financial Economics, 27(2), 315-353.
Grossmann, A., & Ngo, T. (2025). The Stock Market Reaction To Bond Refinancing Issues With And Without Senior Debt. Journal Of Corporate Finance, 91. Doi:10.1016/J.Jcorpfin.2025.102746
Gupta, I., & Raman, T. V. (2022). Shareholder’s Reaction To Merger And Acquisition Announcement: Evidence From India’s Manufacturing Sector. Finance: Theory And Practice, 26(5), 149-157. Doi:10.26794/2587-5671-2022-26-5-149-157
Hotchkiss, E. S., & Mooradian, R. M. (1997). Vulture Investors And The Market For Control Of Distressed Firms. Journal Of Financial Economics, 43(3), 401-432.
James, C. (1996). Bank Debt Restructurings And The Composition Of Exchange Offers In Financial Distress. The Journal Of Finance, 51(2), 711-727.
Jegadeesh, N., & Titman, S. (1993). Returns To Buying Winners And Selling Losers: Implications For Stock Market Efficiency. The Journal Of Finance, 48(1), 65-91.
Jensen, M. C. (1978). Some Anomalous Evidence Regarding Market Efficiency.
Joshi, N. A., & Desai, J. (2019). Financial Restructuring And Its Impact On Operating Performance In The Energy Sector In India. Indian Journal Of Finance, 13(1), 37-54. Doi:10.17010/Ijf/2019/V13i1/141047
Kaur, D., & Srivastava, S. (2017). Corporate Debt Restructuring And Firm Performance: A Study Of Indian Firms. Serbian Journal Of Management, 12(2), 271-281.
Kirilenko, A., Kyle, A. S., Samadi, M., & Tuzun, T. (2017). The Flash Crash: High‐Frequency Trading In An Electronic Market. The Journal Of Finance, 72(3), 967-998.
Lo, A. W. (2004). The Adaptive Markets Hypothesis: Market Efficiency From An Evolutionary Perspective. Journal Of Portfolio Management.
Mackinlay, A. C. (1997). Event Studies In Economics And Finance. Journal Of Economic Literature, 35(1), 13-39.
Mishra, A. K., Ansari, Y., Bansal, R., & Maurya, P. K. (2024). Regional And Periodic Asymmetries In The Effect Of Russia-Ukraine War On Global Stock Markets. Heliyon, 10(7). Doi:10.1016/J.Heliyon.2024.E28362
Panjaitan, P. I. (2022). Analisis Dampak Covid-19 Terhadap Abnormal Return Dan Trading Volume Activity. Jurnal Perspektif Bisnis, 5(2), 138-148.
Putri, H. T. (2020). Covid 19 Dan Harga Saham Perbankan Di Indonesia. Eksis: Jurnal Ilmiah Ekonomi Dan Bisnis, 11(1), 6-9.
Ross, S. A. (1977). The Determination Of Financial Structure: The Incentive-Signalling Approach. The Bell Journal Of Economics, 23-40.
Santoso, S. (2014). Statistik Multivariat Edisi Revisi (Vol. 224). Jakarta: Pt Elex Media Komputindo.
Saragih, A. E. (2019). Event Study: Reaksi Pasar Terhadap Pengumuman Dividen Pada Perusahaan Yang Terdaftar Di Bursa Efek Indonesia. Jurnal Riset Akuntansi & Keuangan, 1-24.
Sazly, S., Erri, D., Prana, I., & Dewi, I. K. (2024). Pt. Garuda Indonesia Airways (Tbk) Revival: A Strategic Debt Restructuring And Business Transformation Against Bankruptcy. Dynamic Management Journal, 8(4), 1065-1081.
Shleifer, A. (2000). Inefficient Markets: An Introduction To Behavioural Finance: Oup Oxford.
Truong, N. X., Huong, D. M., & Van Anh, N. T. (2017). Stock Price Reaction To Cash Dividend Announcements In Vietnam. Journal Of Economic Development, 24(2), 74-89. Doi:10.24311/Jabes/2017.24.2.01
Yanagawa, N. (2014). Comments On Part Ii: Unsolved Aspects Of Corporate Governance Problems. In Enterprise Law: Contracts, Markets, And Laws In The Us And Japan (Pp. 172-174).
Zhou, Y., Liu, M., & Peng, D. (2014). Research On Governance And Market Effect Of Listing Corporation Debt Restructuring: Based On The Angle Of Moral Hazard. Paper Presented At The 11th International Conference On Service Systems And Service Management, Icsssm 2014 - Proceeding.
Published
2025-06-30
How to Cite
FAUZIAH, Fitri Ella; MURHARSITO, murharsito.
MARKET REACTION ON PT GARUDA INDONESIA DEBT RESTRUCTURING ANNOUNCEMENTS.
Jurnal Akuntansi, [S.l.], v. 13, n. 1, p. 49 - 58, june 2025.
ISSN 2540-9646.
Available at: <https://jurnalfe.ustjogja.ac.id/index.php/akuntansi/article/view/4522>. Date accessed: 04 july 2025.
doi: https://doi.org/10.30738/ja.v13i1.4522.
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