Does the social restriction policy in handling COVID-19 have an impact on the stock market and financial decisions?: Lessons learned from Indonesia

This research aims to determine the impact of the COVID-19 case on stock prices and financial decisions when implementing the Indonesian government's policy phases in dealing with COVID-19. This study used secondary data from idx.co.id along with a sample of companies listed on the Indonesian Stock Exchange. The total observations are 59,987 surveillance instances, using a regression model with panel data. This research shows that COVID-19 cases during 2020 and 2021 have had both positive and negative impacts on stock returns and company financial decisions, depending on whether the social restriction policy period issued by the government was long and the strictness in implementing the policy. According to the government and investors, early and measurable preventive measures and proactive reactions are crucial. The government must be aggressive, such as extending the policy period and being stricter in terms of policy implementation, to suppress the virus outbreak and increase investor confidence. Currently, there are varied studies examining the impact of COVID-19 on the stock market, but they were only based on studies with a one-event period. Meanwhile, this study is based on the number of confirmed COVID-19 cases over a long period, considering different phases of the Indonesian government's policy compared to other countries, and uses one dependent variable that has never been measured based on the number of confirmed COVID-19 cases, namely financial decisions.