Impact of Bonus Issue announcement on the Indian Stock Market: An Empirical event study

Premasundara Iyengar; Rajeshri Parmar; Yecha Aparna; Ponnaganti Geethanjali

Volume : VII, Issue : V, May - 2018

Impact of Bonus Issue announcement on the Indian Stock Market: An Empirical event study

Premasundara Iyengar, Rajeshri Parmar, Yecha Aparna, Ponnaganti Geethanjali

Abstract :

Corporate actions announcement is usually assumed to offer good news to participants in market. In case of fictitious corporate action such as Bonus share issue, tend to react on market price positively or negatively. In light of this, present study aims to investigate the impact of Bonus Issue announcement on Indian stock market for the period of 3 years from 2015 to 2017. We applied event study methodology using a sample size of 80 companies from BSE. –20 to +20 investigation window taken for all bonus issue announcement event to test the abnormal return considering 52 companies. The result reveals that Indian Stock market does not react to Bonus share issue announcement. Thus, this paper contributes to the fact that there is no significant effect on stock price when a company announces the issue of bonus shares.