The Stock Price Relationship between Holding Companies and Subsidiaries: A Case study of Indonesia Multiholding Companies

Muhammad Aufaristama

Papers from arXiv.org

Abstract: This study aimed to examine the correlation between the stock prices of two major Indonesian holding companies, MNC Group and Elang Mahkota Teknologi (Emtek) Group, and their respective subsidiaries as case studies. The data for the analysis were collected from 2013 to 2022, and Spearman correlation was used to determine the strength and direction of the relationship between the stock prices of the holding companies and their subsidiaries. The results of the analysis revealed that there were varying degrees of correlation between the stock prices of the holding companies and their subsidiaries. The strongest positive correlation was observed between BHIT and BMTR, while the weakest correlations were found between BHIT and IPTV, and BHIT and MSIN. The correlations were also found to have changed over time, possibly due to market conditions, company-specific events, or changes in industry sectors.In the case of Emtek Group, the analysis suggested that EMTK's stock price movements had a significant impact on the stock prices of its subsidiaries, with varying strengths of relationships. The negative correlation between EMTK and SCMA over the entire period suggested an inverse relationship, while positive correlations with BUKA, AMOR, BBHI, and RSGK indicated a tendency to move in the same direction as EMTK's stock price. The correlations were found to have increased over time, possibly due to market conditions and EMTK's ownership stake in these companies. Overall, the findings of this study suggest that there is a complex interplay between the stock prices of parent companies and their subsidiaries, and that there are a variety of factors that can influence these relationships over time. These findings may be useful for investors in making informed decisions about their investment portfolios, as changes in the correlations could impact their portfolio's performance.

Date: 2023-03
New Economics Papers: this item is included in nep-fmk and nep-sea
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