Wealth Added for Shareholders Conglomerate Research

Abstract

This paper investigates empirically the association between wealth added for shareholders conglomerate and Stock Returns. This issue has been hotly debated in academic circles because a lot of growing a conglomerate that dominates the market of a country starts from a family company . The larger the family company that makes a conglomerate made the greater dominance of family and of course will affect the stock price. The conglomerate owners know that it's better to buy / make companies in the same industry / different yes bank to borrow money at high interest rates , they are more than happy to make or buy the target company has a long corporate profits is greater than the interest, the overall profit Appears on investment conglomerate grows . Also, the conglomerate has a better ability to borrow in the money markets or capital markets compared to smaller community banks in their company . Over the years this has been enough to make the company's stock price increases , because companies that are considered most often in the return on their investment . Alone conglomerators aggressive nature is enough to make - many investors , who see the power of " strong " and seems unstoppable in business , buy their stock . High stock price allows them to increase lending more , based on the value of their shares , and thus buy more companies.The present study will examine the influence of property and real estate conglomerate that some company listed on the Indonesia Stock Exchange and the other has not been registered thus adding to the stock returns for shareholder wealth. This study controls the effect of Number owned Subsidiary, the Second Generation in composition Senior Management, Performance Price Shares, Economic Value Added (EVA), Market Value Added (MVA) and Wealth Added for shareholders on stocks return.Year by year of regression analysis is used to get external validity of the result. The findings of this study agree with studies that Fernandez (2002), where the EVA does not properly measure Wealth Creation is seen that if the value of the EVA positive returns to negative shareholders. It is supported also by the increasing WAI will lower stock returns. This is because the additional wealth for shareholders reused by shareholders for investment in the development of existing businesses as subsidiaries expand through the acquisition of similar companies / other and or create a new company. Therefore, by enlarging its subsidiaries become an additional tool to increase shareholder wealth created. Number of subsidiaries owned by a conglomerate if more and more and bring the benefits will increase the stock price . This is based on the aggressive nature of the conglomerators Themselves was enough to make- many investors , who saw a "powerful " and seemingly unstoppable force in business , buy their stock . High stock prices allowed them to raise more loans , based on the value of their stock , and thereby buy even more companies