Corporate Actions and Stock Prices – A Study with Reference to Select Industries

Corporate Actions and Stock Prices – A Study with Reference to Select Industries

1.       B. Nithin, Student, School of Management Studies, Chaitanya Bharathi Institute of Technology, pgs22004_mba.nithin@cbit.org.in

2.       Dr. B. Lavanya, Assistant Professor, School of Management Studies, Chaitanya Bharathi Institute of Technology, blavanya_sms@cbit.org.in

ABSTRACT

Corporate events affect the stock market in many ways, and it has been noted that study on stock price movement has drawn interest from a number of scholars. Consequently, the goal of this study is to further our understanding of how Indian share prices behave with respect to corporate actions. The study is based on secondary data. Businesses that are listed on the BSE were chosen at random from a list of businesses that have recently made announcements about their corporate actions. When analyzing data, event research technique is employed to determine the impact of a given event, how soon its impacts are reflected in asset values, and the impact of particular events, such as dividend and bonus announcements. In this research, the pre-announcement period (- 15 to -1) and the post-announcement period (1 to 15) are used to examine the impact surrounding the date of the corporate action announcement. Overall study demonstrates that the market responds favorably when bonuses and dividends are announced. Investors can gain a great deal from this study by understanding how market movement and company share price changes occur during bonus and dividend announcements. This knowledge will help investors make wise portfolio investment decisions at the appropriate times.

Keywords: Stock prices, Bonus, Dividend, Announcements.