scholarly journals Does privatization of public sector banks affect stock prices? An event study approach on the Indian banking sector stocks

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Varun Kumar Rai ◽  
Dharen Kumar Pandey
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Event Study ◽  
Banking Sector ◽  
Abnormal Returns ◽  
Content Type ◽  
Public Sector Banks ◽  
Study Methodology ◽  
Statistical Results ◽  
Event Study Methodology

PurposeWith a sample of 22 banks, this study examines the significance of the news contents about the privatization of two public sector banks in India. New information does impact the stock markets. This study provides evidence on how the privatization of public sector banks impacted the returns of the Indian banking sector.Design/methodology/approachThis study employs the standard event study methodology with the market model for estimating the normal returns.FindingsThe statistical results indicate that while the private sector banks experienced positive average abnormal returns on the event day, the cumulative effect of the announcement is negatively significant for both private and public sector banks. The statistical results also provide evidence of information leakage, with significant results before the announcement date. The shorter event windows analysis exhibits significant positive returns in the 5-days [−2, +2] window for the private sector banks and the entire sample, signifying a positive short-term impact on the private sector banks.Originality/valueThe event study literature captures the impacts of many events. However, to the best of our knowledge, the impacts of the privatization of the Indian public sector banks have never been examined using the event study methodology. Hence, this study anticipates being the first-ever study to fill this gap and extend the available literature in finance. In addition, although we provide Indian evidence, future studies may be oriented to capture cross-country impacts.

Segment reporting in a developing economy: the Indian banking sector

2017 ◽  
Vol 25 (1) ◽  
pp. 127-147 ◽  
Author(s):  
Jacqueline Birt ◽  
Mahesh Joshi ◽  
Michael Kend
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Banking Sector ◽  
Value Relevance ◽  
Emerging Market ◽  
Developing Economy ◽  
Content Type ◽  
Share Prices ◽  
Segment Reporting ◽  
Public Sector Banks

Purpose The purpose of this paper is to investigate the value relevance of segment information for both public and private sector banks in India. In doing so, this paper examines a rapidly developing economy and perhaps its most critical sector during this period of strong economic growth. Design/methodology/approach In this study uses the simplified Ohlson model, for a sample of 136 private sector and public sector banks for the period 2007-2010 in India. Findings The paper finds that public sector banks have higher share prices, higher earnings and more equity compared with private sector banks. Segment earnings data is highly value relevant for both sectors; however, segment equity data is only marginally value relevant for Indian banks. The number of segments is also value relevant and associated with higher share prices. Originality/value The results of this study contribute additional evidence to the literature on segment reporting by studying the effect of adoption of segment reporting in an emerging market. Findings from the paper are particularly relevant as India is currently in the process of changing its segment reporting requirements and moving to an IFRS-based segment standard.

Measuring the performance efficiency of banks in a developing economy

2018 ◽  
Vol 25 (2) ◽  
pp. 575-606 ◽  
Author(s):  
Sashank Chaluvadi ◽  
Rakesh Raut ◽  
Bhaskar B. Gardas
Keyword(s):  
Public Sector ◽  
Private Sector ◽  
Banking Sector ◽  
Data Envelopment ◽  
Content Type ◽  
The Public ◽  
Public Sector Banks ◽  
Quality Category ◽  
Indian Banks

Purpose The purpose of this paper is to measure and evaluate the performance efficiency of 44 Indian commercial banks, out of which 26 banks belong to the public sector, and 18 banks are from the private sector for the period of 2008-2013. Design/methodology/approach The two-stage network data envelopment analysis (DEA) approach (i.e. variable return to scale and constant return to scale) is used for the measurement of performance in the Indian banking sector. To verify the robustness of the proposed study, sensitivity analysis is also performed. Findings A comparative study between public sector banks (PSBs) and private sector banks (PVBs) showed that latter being more productive compared to the former. The investigation highlighted that two banks are most efficient among the PSBs, and eight banks from PVBs are found to be most effective. On the other side, the performance of State Bank of Bikaner & Jaipur and Lakshmi Vilas Bank is discovered to be less significant from PSB and PVB category, respectively. Research limitations/implications This study will guide the Indian banks to improve upon the factors in which they are lagging, for the improvement of their overall performance. The quality category parameters, i.e. quality of service, quality of equipment, are not considered due to unavailability of information in the output measures, and the methodology used for the study does not identify the causes or remedies for the inefficiency of the banks. Originality/value The developed DEA model would help the decision maker to take decisions on the issues related to the performance of the banks. This paper discusses very practical issues in an analytic manner.

scholarly journals Impact of Merger and Acquisition Announcements on Stock Return, Volatility and Liquidity of Acquirers: Evidence from the Indian Banking Sector

2020 ◽  
Vol 19 (1) ◽  
Author(s):  
Pinky Mal ◽  
Keyword(s):  
Event Study ◽  
Stock Prices ◽  
Stock Return ◽  
Banking Sector ◽  
Abnormal Returns ◽  
Merger And Acquisition ◽  
Stock Volatility ◽  
Study Methodology ◽  
Acquisition Announcements ◽  
Event Study Methodology

This study attempts to examine the stock behaviour of acquirer banks during pre and post-merger and acquisition (M&A) announcement period in the Indian banking sector. Data of M&A events that took place in the Indian banking sector during 2000-2018 was collected from the prowessdx database. The sample consisted of 31 merger and 351 acquisition announcements during 2000-2018 in the Indian Banking sector. Stock prices of sample banks were extracted from the NSE for an event window of -10 to +10 days and the event study methodology was used for analysis. The results suggest that shareholders of Indian acquirer banks generate small and insignificant abnormal returns from M&A deals. Return variability was also noticed from the curvy jumps in the average abnormal spread of returns during the announcement period. Whereas, the average abnormal change in liquidity witnessed a sharp hike on day 0 i.e. the date of deal announcement and it remained negative throughout the post-deal period. KEYWORDS: Mergers and Acquisitions, Stock Return, Stock Volatility, Stock Liquidity, Event Study Methodology.

Stock market reactions to voluntary integrated reporting

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Yuzuka Nakajima ◽  
Yushi Inaba
Keyword(s):  
Stock Market ◽  
Event Study ◽  
Abnormal Returns ◽  
Integrated Reporting ◽  
Market Reactions ◽  
Content Type ◽  
Study Methodology ◽  
Stock Market Reactions ◽  
Voluntary Adoption ◽  
Event Study Methodology

Purpose This study aims to examine the impact of voluntary adoption of integrated reporting on the stock prices of firms in Japan. Design/methodology/approach The event study methodology was used to analyze the stock market reactions to voluntary integrated report (IR) publication. Abnormal returns were estimated for 1,602 observations of 490 firms publishing IRs in Japan using the market model. The t-test, the Boehmer et al., 1991 test and the generalized sign test examined the significance of the cumulative average abnormal returns (CAARs). Findings The study reveals that the stock market reacts positively to voluntary IR publication by firms, especially in 2019 and 2015. Additionally, it reveals a tendency for higher CAARs around IR publication dates than around corporate social responsibility report publication dates, especially in 2016 and 2015. Research limitations/implications The limitations of this study include the possibility of self-selection bias and omitted variable bias. Practical implications This study suggests that firms can earn higher abnormal returns in the stock market through environmental, social and governance (ESG) disclosure in IRs, corroborating the recently rising investor interest in voluntary integrated reporting in Japan. Originality/value This study contributes to the literature on the value relevance of voluntary adoption of integrated reporting by providing evidence of firms achieving significantly positive abnormal returns around voluntary IR publication dates. There is no published analysis on this topic using multitudes of sample firms using the event study methodology.

scholarly journals IMPACT OF DEMONETIZATION ON INDIAN BANKING STOCKS: AN EVENT STUDY METHODOLOGY

2021 ◽  
pp. 32-39
Keyword(s):  
Event Study ◽  
Tax Evasion ◽  
Stock Prices ◽  
Banking Sector ◽  
Abnormal Returns ◽  
Indian Government ◽  
Study Methodology ◽  
Indian Stock Market ◽  
The Impact ◽  
Event Study Methodology

Demonetization is the withdrawal of a particular form of currency from circulation. In other words, the notes lose their value as a currency. It is an instrument that is used to manage various economic problems such as inflation, corruption, tax evasion, etc. The Indian government on November 8, 2016, decided to demonetize high denomination currencies. This announcement had an impact on several sectors of the Indian economy. This study is an investigation to measure the impact of demonetization announcements on the Indian banking sector. This study employs cumulative abnormal return (CAR) and an event study methodology to measure the impact of the decision on the selected banking stocks. The study shows that demonetization had a significant impact on the stock prices of selected banks. The findings of the study suggest that on the event day, none of the selected stock has shown significant positive abnormal returns. Further on the event day and followed by the event day positive significant ARR is observed indicating demonetization had a significant impact on the stock prices of selected banks. Also, CAR on the event day is not equal to zero indicating the Indian stock market was not efficient for demonetization announcement.

Market reactions to the inclusion of people with disabilities

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Claudia Araceli Hernández González
Keyword(s):  
Event Study ◽  
Stock Prices ◽  
Stock Price ◽  
Abnormal Returns ◽  
People With Disabilities ◽  
Market Reactions ◽  
Content Type ◽  
Study Methodology ◽  
Research Advance ◽  
The Impact

PurposeThis study aims to provide evidence of market reactions to organizations' inclusion of people with disabilities. Cases from financial journals in 1989–2014 were used to analyze the impact of actions taken by organizations to include or discriminate people with disabilities in terms of the companies' stock prices.Design/methodology/approachThis research is conducted as an event study where the disclosure of information on an organization's actions toward people with disabilities is expected to impact the organization's stock price. The window of the event was set as (−1, +1) days. Stock prices were analyzed to detect abnormal returns during this period.FindingsResults support the hypotheses that investors value inclusion and reject discrimination. Furthermore, the impact of negative actions is immediate, whereas the impact of positive actions requires at least an additional day to influence the firm's stock price. Some differences among the categories were found; for instance, employment and customer events were significantly more important to a firm's stock price than philanthropic actions. It was observed that philanthropic events produce negative abnormal returns on average.Originality/valueThe event study methodology provides a different perspective to practices in organizations regarding people with disabilities. Moreover, the findings in this research advance the literature by highlighting that organizations should consider policies and practices that include people with disabilities.

New product announcement: spokesperson a manifestation of increasing firm value

2018 ◽  
Vol 13 (6) ◽  
pp. 1635-1655
Author(s):  
Bikram Jit Singh Mann ◽  
Sonia Babbar
Keyword(s):  
Event Study ◽  
Firm Value ◽  
Source Credibility ◽  
Shareholder Value ◽  
Abnormal Returns ◽  
New Product ◽  
Content Type ◽  
Study Methodology ◽  
The Impact

Purpose Before introducing new products, companies make announcements regarding the launch of the product which influences stock market yields of the announcing companies. Information content of the new product announcement has never been an exclusive focused stream of research. Therefore, an assessment of the impact of the content characteristics of the new product announcement on the shareholder value and the impact of source credibility (spokesperson) in making such announcements is a major gap in the existing literature. The paper aims to discuss these issues. Design/methodology/approach First, the standard event study methodology has been employed on the sample to measure the abnormal gains/losses accruing to the announcing firms. Second, moderated regression analysis (MRA) is employed to identify the characteristics of the new product announcement and to check the role of the spokesperson in creating shareholder value. Findings The results of the event study indicate that the abnormal returns are generated during the new product announcement. The results of MRA disclose the variables having a positive and a significant influence on the effective returns of the announcing companies. Likewise, the role of the spokesperson has come out brightly as a credible communicator. Originality/value The research provides a direction to the announcing companies regarding the content of the announcement leading to a positive perception among the investing community. Likewise, it also provides direction to the investor community about the characteristics of the announcement content they give weight age in forming a perception of strength in evaluating the new product announcement, to which they are largely unaware.

scholarly journals Customer Engagement with Social Media Bank Pages with Reference to Facebook

2019 ◽  
Vol 8 (2S11) ◽  
pp. 3089-3095
Keyword(s):  
Social Media ◽  
Public Sector ◽  
Private Sector ◽  
Banking Sector ◽  
Banking System ◽  
Customer Engagement ◽  
Public And Private ◽  
Public Sector Banks ◽  
Social Media Platforms ◽  
Public And Private Sector

Indian banking sector is going through a massive transformation day by day with the advancement of Information and communication Technology and impact of digitization in the banking industry. After the core banking system, banks have moved further to reap the benefits of internet and mobile banking. In order to engage more customers anywhere and anytime without visiting the brick and mortar branches, the banks have now introduced the social media banking. Most of the people are already active in different social media platforms, so banks have grabbed that opportunity to reach people easily and provide services through social media. This paper has made an attempt to analyze the engagement of social media customers in different banks including public and private sector with reference to facebook bank page. The results show that most of the banks have presence on popular social media platforms. With respect to the engagement of customer to all facebook posts during the study period, public sector banks are posting more on their respective facebook page but the customers’ likes as well as dislikes are more for SBI, ICICI and AXIS. In case of shares and comments, SBI and PNB have more and are increasing continuously as these two banks post more on their respective facebook pages. But with respect to customer engagement per facebook post during the study period, customers are engaged more with private sector banks. And it can be said that regarding overall customer engagement people are more engaged with private sector over public sector banks.

scholarly journals Impact of Smoking Ban Fatwa on Indonesian Tobacco’s Company

2013 ◽  
Vol 2 (2) ◽  
pp. 76-86
Author(s):  
Gatot Soepriyanto ◽  
Paulina Santoso
Keyword(s):  
Event Study ◽  
Abnormal Returns ◽  
Tobacco Consumption ◽  
Share Price ◽  
Market Model ◽  
Smoking Ban ◽  
Muslim Population ◽  
Stock Market Return ◽  
Study Methodology ◽  
Event Study Methodology

The objective of this study is to assess the share price reactions to smoking ban fatwa on Indonesia tobacco’s company. We expect that the smoking ban fatwa in the world’s largest Muslim population will hit the tobaccos industry revenues, lower tobacco’s company profit and eventually affect the share price of those firms. We use event study methodology and standard market model to calculate abnormal returns of the tobacco’s firms related to the news of smoking ban fatwa. Our study failed to find a statistically significant effect of smoking ban fatwa on tobacco’s firm stock market return. It suggests that the investors do not see the fatwa as a factor that may control the tobacco consumption in Indonesia – thus it may not affect the tobacco’s firm revenues and profit in the future

scholarly journals Does leverage level matter for return anomaly during rights issue announcements? The case of Islamic countries

2021 ◽  
Vol 28 (2) ◽  
pp. 141-155
Author(s):  
Murat Isiker ◽  
Oktay Tas
Keyword(s):  
Abnormal Returns ◽  
Content Type ◽  
Share Prices ◽  
Debt Level ◽  
Islamic Countries ◽  
Study Methodology ◽  
Rights Issue ◽  
Return Anomaly ◽  
One Way Anova ◽  
Event Study Methodology

PurposeThis paper aims to measure investors' perception of the rights issue announcement of publicly listed companies in five stock markets of Islamic countries. Then, these firms are grouped according to their debt level to examine whether abnormal returns are different from those that are highly leveraged. Moreover, Sharīʿah compatibility of firms is checked to understand if return anomaly shows different behaviour around rights issue announcement days.Design/methodology/approachThe analysis period includes the years 2010–2019, which includes 362 rights issue announcements. The event study methodology is applied to measure the level of impact that is triggered by the rights issue announcements. Hereafter, one-way ANOVA test is performed to identify whether there exists a difference among the sample groups according to their debt level.FindingsFindings suggest that rights issue announcements cause −3.90% fall in share prices on average for the whole sample. However, negative abnormal return is found significant only in Egypt and Turkey. Individual regression analysis results suggest that an increase in debt level worsens the return anomaly only in Egypt. This refers that the rights issue announcement is perceived as less favourable for highly leveraged companies compared to others in this country. Finally, Sharīʿah-compliant companies show better performance compared to non-compliant counterparts around the event dates.Originality/valueThis paper is novel in evaluating market reaction during rights issue announcements in multiple Islamic countries. Also, to the best of the authors’ knowledge, this study is the first attempt to compare return behaviour of Sharīʿah-compliant and non-compliant firms around the rights issue announcements.

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