An Empirical Analysis of Market Reaction Around the Bonus Issues in India

Asim Mishra ()

Finance from University Library of Munich, Germany

Abstract: Past researches have revealed significant abnormal returns for bonus issues even though the bonus issue date is known in advance and the distribution contains no new information. This study examines the stock price reaction to the information content of bonus issues with a view of examining the Indian stock market is semi-strong efficient or not. The period of the study is June 1998 to August 2004. Samples of 46 bonus issues have been used to study the announcement effect by using event study methodology. The results indicate that there are significant positive abnormal returns for a five-day period prior to bonus announcement in line with evidence from developed stock market. On the announcement day the average abnormal return of -0.10% is observed. The results provide stronger evidence of semi-strong market efficiency of the Indian stock market.

Keywords: Bonus Issues; India; stock market; abnormal returns; semi strong efficient; event study; cumulative abnormal return; Cowan Test; Standardized abnormal return (search for similar items in EconPapers)
JEL-codes: G30 G32 G35 G39 (search for similar items in EconPapers)
Date: 2005-07-04
New Economics Papers: this item is included in nep-cwa and nep-fin
Note: Type of Document - pdf
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Citations: View citations in EconPapers (5)

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Working Paper: An Empirical Analasis of Market reaction Around the Bonus Issues in India (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpfi:0507003

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