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 fatwa as 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
Adda, J., Berlinski, S., and Machin, S. (2007) Short-run economic effects of the Scottish smoking ban, International
Journal of Epidemiology. Oxford: Vol. 36, Iss. 1; 149-155.
Alpert, H.R, Carpenter, C.M, Travers, M.J, and Connolly, G.N. (2007) Environmental and Economic Evaluation of
the Massachusetts Smoke-free Workplace Law, Journal of Community Health, Vol. 32, Iss. 4; pg. 269-282
Bardsley, P. and Olekalns, N. (1999) Cigarette and tobacco consumption: Have anti-smoking policies made a
difference?Economic Record.Vol. 75, Iss. 230; pg. 225 – 241.
Bartosch, W.J. and Pope, G.C (1999) Local enactment of tobacco control policies in Massachusetts, Journal of Public
Health Management Practice, 5(1), 53-62
Reynolds, C (1999) The Fourth largest market in the world, Tobacco Control, 8(1), 89-91
Scollo, M., Lal, A., Hyland, A., and Glantz, S., (2003) Review of the quality of studies on the economic effects of
smoke-free policies on the hospitality industry, Tobacco Control, 12:13-20.
Tomlin, J.T. (2009) The Impact of Smoking Bans on the Hospitality Industry: New Evidence from Stock Market
Returns, Contributions to Economic Analysis & Policy, Vol. 9, Iss. 1.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.