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

Gatot Soepriyanto and Paulina Santoso
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Gatot Soepriyanto: Deapartment of Accounting& FinanceBina Nusantara University, Indonesia
Paulina Santoso: Deapartment of Accounting& FinanceBina Nusantara University, Indonesia

International Journal of Finance & Banking Studies, 2013, vol. 2, issue 2, 76-86

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

Keywords: smoking ban fatwa; tobacco industry; market reaction. (search for similar items in EconPapers)
Date: 2013
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