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The Impact of Smoking Ban Fatwa on Indonesian Tobacco’s Company: Evidence from Stock Market Return

Author

Listed:
  • Gatot Soepriyanto

    (Deapartment of Accounting& FinanceBina Nusantara University, Indonesia)

  • Paulina Santoso

    (Deapartment of Accounting& FinanceBina Nusantara University, Indonesia)

Abstract

The objective of this study is to assess the share price reactions to smoking ban fatwa on Indonesia tobacco’s company. We expect that the smoking ban fatwa in the world’s largest Muslim population will hit the tobaccos industry revenues, lower tobacco’s company profit and eventually affect the share price of those firms. We use event study methodology and standard market model to calculate abnormal returns of the tobacco’s firms related to the news of smoking ban fatwa. Our study failed to find a statistically significant effect of smoking ban fatwa on tobacco’s firm stock market return. It suggests that the investors do not see the fatwaas a factor that may control the tobacco consumption in Indonesia –thus it may not affect the tobacco’s firm revenues and profit in the future

Suggested Citation

  • Gatot Soepriyanto & Paulina Santoso, 2013. "The Impact of Smoking Ban Fatwa on Indonesian Tobacco’s Company: Evidence from Stock Market Return," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 2(2), pages 76-86, April.
    • Handle: RePEc:rbs:ijfbss:v:2:y:2013:i:2:p:76-86
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