THE EFFECTS OF BOND RATINGS TOWARDS MARKET REACTION, ASYMMETRY INFORMATION, AND TRADING PATTERNS

Bond rating fluctuations reflect the company's ability to obligate towards investors. Providing information by investors through the bond announcements has an impact on stock returns and trading volumes in the market. Fluctuations trading volume that occur can be a signal in the form of asymmetric information and can indicate investors on trading patterns over the bond rating announcements publications. The efficiency of capital market depends on the security price that reflects all the relevant information. Through testing different variables, it can be seen the indicators that has a major impact on the balancing of market efficient. This study aims to determine the effect of changes in a bond rating on asymmetric information and the patterns of investor trading. Also to determine the effect of asymmetric information and trading patterns towards market reactions. This study used a sample of companies that registered in Bursa Efek Indonesia in 2010-2016 with a purposive sampling technique. The sample is categorized into two, named the increased of bond rating changes group and the decreased of bond rating changes group. Thus, the conclusion on this study is asymmetric information has a positive effect on the balance of market efficient.