Stock Price Reaction to Bonus Share Announcements in India

Karamjeet Kaur and Balwinder Singh

Management and Labour Studies, 2009, vol. 34, issue 2, 202-226

Abstract: Corporate financial policy announcements like stock dividend, stock splits, dividend changes, repurchase of shares, etc. create value to the shareholders through stock price changes. This study employs the standard event study methodology to examine the reaction of stock market to 159 bonus share announcements of Indian companies listed on BSE from January 1999 to December 2004. The results indicate that there are significant positive abnormal returns around the bonus share announcements. Further, cross sectional regression analysis finds support for signaling and optimal price hypothesis. However, undervaluation or attention hypothesis is rejected.

Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:sae:manlab:v:34:y:2009:i:2:p:202-226

DOI: 10.1177/0258042X0903400203

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