Negative Corporate Disclosure and Stock Price Decline: A Normative Legal Analysis of Investor Protection in Indonesia’s Capital Market
DOI:
https://doi.org/10.15294/jpcl.v8i2.21576Keywords:
Negative Corporate Disclosure, Investor Protection, Stock Price Volatility, Capital Market Law, Indonesia Stock Exchange (IDX)Abstract
This study examines the impact of negative corporate disclosure on stock price movements and investor protection in Indonesia’s capital market. The primary objective is to analyze how negative information disseminated through the Indonesia Stock Exchange (IDX) affects investor behavior and market performance. Using a normative legal research approach, this study relies on library-based data collection and employs both statutory and conceptual analyses. The case of PT X, a publicly listed company, and its subsidiary PT Y, an eSAF frame manufacturer for motor vehicles, serves as an illustrative example. The findings demonstrate that negative publicity—particularly related to product concerns such as weight and corrosion resistance—can significantly influence investor perception, even when the product is generally considered to have good quality. The circulation of adverse information triggers investor panic and leads to widespread share sell-offs, ultimately resulting in a decline in PT X’s stock price. This confirms that stock prices tend to move rapidly in response to negative news, reflecting the sensitivity of market behavior to reputational risk and information flow. From a legal perspective, these dynamics raise important questions regarding the adequacy of disclosure obligations and investor protection mechanisms within Indonesia’s regulatory framework. This research contributes by bridging capital market law and investor behavior, highlighting the relationship between corporate news, investor decision-making, and stock market activity. It underscores the need for stronger transparency standards and more effective legal safeguards to mitigate the impact of negative disclosures, offering practical insights for regulators, corporations, and investors in emerging markets.
References
Aggarwal, Divya. "Defining and measuring market sentiments: A review of the literature." Qualitative Research in Financial Markets 14, no. 2 (2022): 270-288. https://doi.org/10.1108/qrfm-03-2018-0033
Anggriawan, Rizaldy. "Unravelling financial wrongdoing: A regulatory perspective on crimes in the Indonesian capital market." Indonesian Journal of Criminal Law Studies 8, no. 2 (2023): 151-172. https://doi.org/10.15294/ijcls.v8i2.47800
Aqmarina, Ifni, Ria Dolly Indra Wijaya Manurung, Elisa br. Tarigan, Leo Ronaldi Simbolon, and Safrina Putri Putri. “Perlindungan Hukum Bagi Investor Pasar Modal Terkait Hilangnya Aset Nasabah Perusahaan Efek Di Pasar Modal.” Journal on Education 05, no. 03 (2023): 6943. http://jonedu.org/index.php/joe
Arifin, Yusuf, Puji Sulistyaningsih, Chrisna Bagus Edhita Praja, Heniyatun Heniyatun, and Bambang Tjatur Iswanto. “Pengawasan Pelaksanaan Prinsip Keterbukaan Informasi Oleh Perusahaaan Publik Pada Papan Akselerasi.” Borobudur Law and Society Journal 1, no. 2 (2022). https://doi.org/10.31603/7407
Ayu Purboningtyas, Dyah, and Adya Prabandari Program Studi Magister Kenotariatan. “Perlindungan Hukum Bagi Investor Pasar Modal Indonesia Oleh Securities Investor Protection Fund.” Notarius 12 (2019).
Butar, Sansaloni Butar, and Monika Palupi Murniati. "How does Financial Reporting Quality Relate to Stock Price Crash Risk? Evidence from Indonesian Listed Companies." Jurnal Dinamika Akuntansi dan Bisnis 8, no. 1 (2021): 59-76. https://doi.org/10.24815/jdab.v8i1.19399
Chen, Xiaomeng, Andreas Hellmann, and Safdar R. Mithani. “The Effect of Fair Value Adjustments on Dividend Policy Under Mandatory International Financial Reporting Standards Adoption: Australian Evidence.” Abacus 56, no. 3 (2020): 436–53. https://doi.org/10.1111/abac.12180
Coria, Jessica, Gunnar Köhlin, and Jintao Xu. “On the Use of Market-Based Instruments to Reduce Air Pollution in Asia.” Sustainability (Switzerland) 11, no. 18 (2019): 19. https://doi.org/10.3390/su11184895
Darami, Aflah bt Isa@, Aina Syazwina Bt Shahidan, and Nurulashikin bt Romli. “The Determinants of Share Price on Commercial Bank in Bursa Malaysia.” International Journal of Academic Research in Business and Social Sciences 12, no. 9 (2022): 569–81. https://doi.org/10.6007/ijarbss/v12-i9/14647
Dwi Kurniawan, Kukuh, Radhityas Kharisma Nuryasinta, Yaris Adhial Fajrin, Yohana Puspitasari Wardoyo, and Nu’man Aunuh. “The Role of Indonesian Notary in the Transfer of Stock Through the Waqf Mechanism After the Covid-19 Pandemic.” KnE Social Sciences 2022, no. 5 (2022): 479–91. https://doi.org/10.18502/kss.v7i15.12120
Fajrina, Rizky Noor, and Waspiah Waspiah. “Supervision by the Financial Services Authority on Investment-Based Life Insurance (Unit Link).” Unnes Law Journal 7, no. 1 (2021): 4. https://doi.org/10.15294/ulj.v7i1.38802
Fang, Xiaohua, Jeffrey Pittman, and Yuping Zhao. "The importance of director external social networks to stock price crash risk." Contemporary Accounting Research 38, no. 2 (2021): 903-941. https://doi.org/10.2139/ssrn.3165281
Febriannisa, Alda, Elsa Afriani, Dela Putri Widianti, Khovivah, Nurdiana Fuji Lestari, and Muhammad Fadilah Kusnadi. “Pengaruh CR, DAR Dan LTDE Terhadap Kebijakan Deviden Pada PT. Astra Internasional TBK (ASII), Tahun 2017-2021.” Jurnal Pendidikan Tambusai 6, no. 2 (2022): 13182–90. https://doi.org/10.31004/jptam.v6i2.4540
Goldstein, Itay. "Information in financial markets and its real effects." Review of Finance 27, no. 1 (2023): 1-32. https://doi.org/10.1093/rof/rfac052
Haidar, Fadilah. “Perlindungan Hukum Bagi Investor Terhadap Praktik Kejahatan Insider Trading Pada Pasar Modal Di Indonesia.” JURNAL CITA HUKUM 3, no. 1 (2015). https://doi.org/10.15408/jch.v2i1.2311
Harimurti, Iwan, Bangun Patrianto, and W. Danang Widoyoko. “Perlindungan Hukum Terhadap Kerugian Investor Atas Pelanggaran Laporan Keuangan Emiten Di Pasar Modal.” Anima Legis 1, no. 1 (2022). https://doi.org/10.55840/al.v1i1.11
Irwansyah, Irwansyah. Penelitian Hukum, Pilihan Metode & Praktik Penulisan Artikel. Yogyakarta: Mirra Buana Media, 2021.
Jelantik, I Gusti Ayu Agung Istri Dinda Larasshanti, and AnakAgung Gede Suarjaya. “Analysis of Capital Market Reaction To the Announcement of the Minister of Finance Regulation (Pmk) Number 20/Pmk.010/2021 and Number 77/Pmk.010/2021.” American Journal of Humanities and Social Sciences Research 6, no. 3 (2022): 248.
Jonkman, Jeroen G.F., Mark Boukes, Rens Vliegenthart, and Piet Verhoeven. “Buffering Negative News: Individual-Level Effects of Company Visibility, Tone, and Pre-Existing Attitudes on Corporate Reputation.” Mass Communication and Society 23, no. 2 (2020): 272–96. https://doi.org/10.1080/15205436.2019.1694155
Komalasari, Puput Tri, et al. "Herding behaviour in the capital market: what do we know and what is next?." Management Review Quarterly 72, no. 3 (2022): 745-787. https://doi.org/10.1007/s11301-021-00212-1
Mahendra, Yustisio, Winserly Tan, and Rufinus H Hutauruk. “Motorcycle Consumer Protection in Indonesia : An Analysis of ESAF Frame Implementation on Honda Matic Motorcycles” 13, no. 1 (2024): 126. https://legal.isha.or.id/index.php/legal/index
Marzuki, Peter Mahmud. Penelitian Hukum. Jakarta: Kencana, 2005.
Munandar, Aris, Sudiarto Sudiarto, and Lalu Wira Pria Suhartana. “Kedudukan Saham Atas Nama Dalam Perkawinan.” Jurnal Risalah Kenotariatan 2, no. 2 (2021). https://doi.org/10.29303/risalahkenotariatan.v2i2.53
Nasution, Emmi Rahmiwita. "Investor protection in indonesia: A legal analysis of securities regulation." International Journal on Social Science, Economics and Art 13, no. 2 (2023): 126-135.
Pah, Gress Gustia Adrian. "Full Disclosure and Material Information Principle for Back Door Listing Companies." Russian Law Journal 11, no. 3 (2023): 110-122. https://doi.org/10.52783/rlj.v11i3.970
Pandey, Aishwarya. “Consumer Protection in the Era of E-Commerce: Issues and Challenges.” International Journal of Legal Science and Innovation 4, no. 1 (2022): 632. https://doi.org/10.10000/IJLSI.111355
Pohan, Ghiffary Akmal Alija, FX Joko Priyono, and Ery Agus Priyono. "Application of Principle Full Disclosure and Legal Protection for Investor Due To Market Manipulation of Shareprices By Issuers in Capital Market." CREPIDO 5, no. 1 (2023): 104-115. https://doi.org/10.14710/crepido.5.1.104-115
Priyadi, Lionel, and Yoshi Takahashi. “The Dynamics of the Toyota-Astra Hybrid Structure Partnership.” Institutions and Economies 11, no. 1 (2019): 85.
Putri Anjani, Emeralda, Nyulistiowati Suryanti, and Deviana Yuanitasari. “Tinjauan Yuridis Terhadap Influencer Yang Merekomendasikan Saham Tertentu Berdasarkan Hukum Pasar Modal Di Indonesia.” Reformasi Hukum 26, no. 2 (2022). https://doi.org/10.46257/jrh.v26i2.467
Rachmadini, Vidya Noor. “Perlindungan Hukum Bagi Investor Dalam Pasar Modal Menurut Undang-Undang Pasar Modal Dan Undang-Undang Otoritas Jasa Keuangan.” Pena Justisia: Media Komunikasi Dan Kajian Hukum 18, no. 2 (2020): 89–96. https://doi.org/10.31941/pj.v18i2.1093
Sa’diyah, Sarifatus, and Sharda Abrianti. “Tanggung Jawab Pt Inovisi Infracom (Invs) Terhadap Investor Publik Atas Forced Delisting Oleh Pt Bursa Efek Indonesia Berdasarkan Peraturan Di Bidang Pasar Modal.” Reformasi Hukum Trisakti 1, no. 2 (2019). https://doi.org/10.25105/refor.v1i2.7677
Sawaliana, and Rahman. “Strategi Media Relations PT Excelcomindo Pratama, TBK (XL) Membangun Hubungan Dengan Wartawan Dalam Rangka Mensukseskan Program Rp 1 /Detik.” Jurnal Komunikologi 7, no. 1 (2010): 60.
Setiany, Erna, and Djoko Suhardjanto. "Disclosure, Information Asymmetry and the Cost of Equity Capital: Evidence from Indonesia." Recent Developments in Asian Economics International Symposia in Economic Theory and Econometrics. Vol. 28. Emerald Publishing Limited, 2021. https://doi.org/10.1108/s1571-038620210000028020
Sofyan, Rita, Defriko Gusma Putra, and Riyadi Aprayuda. “Does the Information on the Internet Media Respond to the Stock Market?” In Proceedings of the 5th Padang International Conference On Economics Education, Economics, Business and Management, Accounting and Entrepreneurship (PICEEBA-5 2020, 152:510–20, 2020. https://doi.org/10.2991/aebmr.k.201126.057
Syaputri, Shara Ariesta, and Pandu Adi Cakranegara. “Comparative Analysis Of Financial Distress Methods In The Automotive Component Industry: Altman, Grover, And Zmijewski.” Jurnal Mantik 5, no. 2 (2021): 1737.
Tanaka, Masashi. “Human Capital Investment, Credentialing, and Wage Differentials.” Journal of Public Economic Theory 22, no. 4 (2020): 992–1016. https://doi.org/10.1111/jpet.12443
Usmani, Shazia, and Jawwad A. Shamsi. “News Sensitive Stock Market Prediction: Literature Review and Suggestions.” PeerJ Computer Science 7 (2021): 1–36. https://doi.org/10.7717/PEERJ-CS.490
Utama, Muhammad Alfito Prawidiya, and Muthia Sakti. “Consumer Protection for Honda Vehicle Users with Frame ESAF Damage Based on the Principles of Consumer Safety and Security.” Journal of Law, Politic and Humanities 4, no. 5 (2024): 1327. https://doi.org/10.38035/jlph.v4i5
Widyastuti, Ayu, Lastuti Abubakar, and Kartikasari. “Perlindungan Hukum Terhadap Investor Atas Pelanggaran Prinsip Keterbukaan Informasi Oleh Emiten.” Literasi Hukum 4, no. 2 (2020).
Wiranata, Rico Bayu, and Arif Djunaidy. “Optimasi Hyper-Parameter Berbasis Algoritma Genetika Pada Ensemble Learning Untuk Prediksi Saham Yang Mempertimbangkan Indikator Teknikal & Sentimen Berita.” JATISI: Jurnal Teknik Informatika Dan Sistem Informasi 8, no. 3 (2021).
Downloads
Published
Article ID
21576Issue
Section
License
Copyright (c) 2024 Amar Ma’ruf, Arvian Wiyanggoro (Author)
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The Journal of Private and Commercial Law adheres to the principles of the Directory of Open Access Journals (DOAJ) by providing immediate, free, and open access to all published content. All articles are published under the Creative Commons Attribution-NonCommercial 4.0 International License (CC BY-NC 4.0). Under this license, users are permitted to read, download, copy, distribute, and adapt the published works in any medium or format, provided that appropriate credit is given to the original author(s) and source, a link to the license is included, and any changes made are clearly indicated. The use of the material is strictly limited to non-commercial purposes only.
Authors retain copyright of their work without any restriction. The journal does not transfer copyright from authors; instead, authors grant the journal the right of first publication while maintaining full ownership of their intellectual property. This ensures that authors preserve their rights while enabling wide dissemination and accessibility of their research in accordance with open access principles and DOAJ standards.
