HOW A DOMESTIC MARKET OBLIGATION POLICY AFFECTING THE COMPANY FINANCIAL PERFORMANCE: CASE STUDY OF COAL MINING INDUSTRY IN INDONESIA

Indonesia has a great potential in natural resources in term of coal resources. The average ratio of the nation’s coal production being exported from 2000 to 2014 is 75.4%. With a high ratio of national coal production being exported rather than for domestic market, Indonesia is currently leading the global coal exporters with a total contribution to global coal exports of 28.59%. In March 2018 the government are issuing the DMO price policy written in Government Regulation No. 8/2018 and Ministry of Energy and Mineral Resources Regulation No. 19/2018 related to guidance of the determination of the coal price for electricity that is supplied in the public interest protect domestic market needs. This research aims to obtain empirical evidence about the differential in the financial performance of Indonesian Public Listed Coal Companies before and after the Domestic Market Obligation price policy issuance represented with Return on Assets ratio. This research will be using 17 Indonesian Public Listed Coal Companies and using difference-in-difference method with Return on Asset ratio using 2 period of event window which was 2 quarter before and after the regulation was issued. To validate the result from difference-in-difference analysis, this research will be analyzed with Wilcoxon Signed Rank Test. The analysis indicates that the short term effect of the Domestic Market Obligation price policy issued by the government did not give a significant impact towards the financial performance of Indonesian Public Listed Coal Companies represented with Return on Assets ratio.Keywords: Financial Performance; Coal Industry; Profitability Ratio; Difference-in-Difference