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AN EMPIRICAL TEST OF INDIAN STOCK MARKET EFFICIENCY IN RESPECT OF BONUS ANNOUNCEMENT

M. Raja

Bharathidasan University College (Lalgudi), India.

J. Clement Sudhahar

 Karunya University, India.

ABSTRACT

A capital market is said to be efficient with respect to an information item if the prices of securities fully impound the return implications of that item. The efficiency with which the capital formation is carried out depends on the efficiency of the capital markets and financial institutions. A capital market is said to be efficient with respect to corporate event announcement (stock split, buyback, right issue, bonus announcement, merger & acquisition, dividend etc) contained information and its disseminations. How quickly and correctly the security prices reflect these event contained information show the efficiency of stock markets. Present study is an attempt to test the efficiency of Indian stock market with respect to bonus issue announcement by IT companies.

Key words: Market Reaction/Stock Price Reaction, Abnormal Returns, Announcement Period, Efficient Market, bonus announcement.

JEL codes: G14, G15