scholarly journals Market Reaction to Buyback Announcement: Evidences from Select Indian Manufacturing Companies

2019 ◽  
Vol 8 (4) ◽  
pp. 9342-9353
Keyword(s):  
Market Reaction ◽  
Abnormal Returns ◽  
Market Model ◽  
Open Market ◽  
Manufacturing Companies ◽  
Tender Offer ◽  
Market Return ◽  
Study Methodology ◽  
Year 2000 ◽  
Event Study Methodology

Buyback of shares is the company’s strategic move to decrease the outstanding shares in the market by buying its own shares from their own shareholders. This study is an effort to analyse the effect of share buyback announcement by manufacturing companies in India, considering 182 events from both the tender offer and open market method from financial year 2000-01 to 2018-19. The event study methodology from the market model has been considered to attain the Abnormal returns (AR). Stock return and market return both are calculated from the daily market data of BSE. BSE S&P SENSEX is considered as benchmark index for the calculation of market return. The market reaction to buyback offers are positive in India according to most of the previous studies, the same is observed even in this study on select manufacturing companies.

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

EFFECT OF BONUS ISSUE ON STOCK PRICES OF COMPANIES QUOTED AT THE NAIROBI SECURITIES EXCHANGE

2017 ◽  
Vol 2 (1) ◽  
pp. 1
Author(s):  
Patrick Maina Gachuhi ◽  
Cyrus Iraya
Keyword(s):  
Stock Returns ◽  
Stock Prices ◽  
Abnormal Returns ◽  
Secondary Data ◽  
Market Model ◽  
Expected Returns ◽  
Policy Makers ◽  
Study Methodology ◽  
The Difference ◽  
Event Study Methodology

Purpose: The purpose of this study was to determine the effect of bonus issue on stock prices of companies quoted at the Nairobi securities exchangeMethodology: The study adopted an event study methodology since the study was concerned with the establishment of the information content of bonus issue announcement on share performance at the NSE. The population of this study was 61 companies listed in the NSE. A sample size of 10 listed companies was focused on as there were only 10 companies which had issued bonuses between 2009 and 2012. The study used secondary data to gather information. The collected secondary data was coded and entered into Statistical Package for Social Sciences (SPSS, Version 20) for analysisResults: The study findings revealed that there was a drastic incline from year 2009 to year 2010 followed by a slight decrease in abnormal returns in the following years, Abnormal returns present the difference between the actual returns and the expected returns over a certain period of time. Study findings from the market model indicated that the market return is a good predictor of stock returns.  ANOVA results indicated that abnormal returns after bonus issue were significantly higher than abnormal returns before bonus issue. ANOVA results also indicated that actual stock returns were significantly higher after bonus issue than before the bonus issuePolicy recommendation: The study recommends the NSE to establish and enhance policies for investing so as to attract and encourage large institutional and foreign investors to participate at the NSE. The study also recommends that policy makers and regulators at the NSE are encouraged to encourage more research on the NSE form of efficiency; this will provide a forum for investors to get the information on the form of efficiency of the market and boost their confidence when investing at the NSE

scholarly journals Will Investors Profit By Following The Stock Recommendations Published In Barrons?

2011 ◽  
Vol 4 (3) ◽  
Author(s):  
Francis Cai ◽  
LianZan Xu
Keyword(s):  
Event Study ◽  
Abnormal Returns ◽  
Market Model ◽  
Stock Recommendations ◽  
Study Methodology ◽  
The Impact ◽  
Event Study Methodology

Barron's is a weekly financial magazine published by Dow Jones. It’s considered America's premier financial weekly. Every week, Barron’s magazine will include a section “Research Reports,” which contains the analysts’ recommendations. Using event study methodology and market model as a benchmark, we calculate abnormal returns to ascertain the impact of the recommendations published in the Research Reports. We find that there are no statistically significant long-term abnormal returns associated with the published recommendations in Barron’s.

Market reaction of the business cooperation with IT service provider: an investigation of IBM

2020 ◽  
Vol 46 (12) ◽  
pp. 1549-1567
Author(s):  
Cheng-Kui Huang ◽  
Kwo-Whei Lee ◽  
Chien-Huei Chou
Keyword(s):  
Information Technologies ◽  
Market Reaction ◽  
News Coverage ◽  
Abnormal Returns ◽  
Positive Influence ◽  
Content Type ◽  
It Service ◽  
Different Types ◽  
Study Methodology ◽  
Event Study Methodology

PurposeSince business competition has become more intense throughout the world, most enterprises are seeking to engage in business cooperation with other partners in order to enhance their competitive strengths. However, they do not necessarily develop mature information technologies’ (ITs) capabilities and skills internally but rather outsource them to IT providers. Therefore, the benefits received by firms which adopt the approach of business cooperation with IT providers have become an interesting issue for managers and shareholders.Design/methodology/approachThis study adopted an event study methodology for apprising the short-term business value from the stock market. The authors predicted that investors will react as they receive news coverage about the strategy of business cooperation between outsourcing firms and an IT provider, International Business Machines (IBM) Corporation. The authors then collected all news coverage regarding the firms which had announced business cooperation with IBM and observed different types of abnormal returns.FindingsOn analyzing 53 announcements of cooperation with IBM from 2008 to 2016, the authors found that the announcement of business cooperation had a significantly positive influence on companies' market value.Originality/valueTo the best of the authors’ knowledge, this is the first study to investigate the issue for market reaction to the announcement of business cooperation with IBM.

scholarly journals COVID-19 Impact on Nifty Banks: An Event Study Methodology

2020 ◽  
Vol 22 (1) ◽  
pp. 83-108
Author(s):  
Sabat Kumar Digal ◽  
Yashmin Khatun ◽  
Braja Sundar Seet
Keyword(s):  
Developing Economies ◽  
Abnormal Returns ◽  
Investor Confidence ◽  
First Case ◽  
Catalytic Role ◽  
Study Methodology ◽  
Adjusted Model ◽  
Model Market ◽  
Event Study Methodology

The financial sector, because of its catalytic role in the economy, has always been in the eye of the storm in economic difficulties. Due to the pandemic, the stock market had lost about 27 percent by April 2020 and bank nifty has had a lion’s share in pushing the index down to this level. Uncertainty arose as the containment of the disease and the availability of vaccines remain uncertain; this contributed to the plunge in investor confidence. Because of the central role of banks in the development initiatives of the governments, COVID-19 has become a significant threat to the sustainability of the banks globally, especially in developing economies. However, we believe every downfall brings in new opportunities for the investors. Therefore, the present study attempted to study both the gloom and boon and observed that there were short-term abnormal returns to the investors of nifty banks in two different periods - the detection of the first case of COVID-19 in India and the lockdown periods in India. The impacts of both the events are calculated by applying Market and Risk Adjusted model, Market Adjusted Return model and Mean Adjusted Return model. The paper concludes that the impacts were insignificant during the first period and was quite significant in the subsequent period. Nifty banks have earned negative abnormal returns during the pre-lockdown period and positive abnormal returns during post lockdown period which indicates that the markets reacted positively as India implemented the first lockdown.

Signaling Effect of Shifts in Dividend Policy: Evidence from Indian Capital Markets

2018 ◽  
Vol 6 (2) ◽  
pp. 142-153 ◽  
Author(s):  
Mohit Gupta ◽  
Navdeep Aggarwal
Keyword(s):  
Capital Markets ◽  
Dividend Policy ◽  
Abnormal Returns ◽  
Weak Form ◽  
Event Window ◽  
Developed Markets ◽  
Time Period ◽  
Signaling Effect ◽  
Study Methodology ◽  
Event Study Methodology

Empirical evidence suggests that a large number of studies support the signaling impact of dividends, but the results are more pronounced in developed markets as compared to emerging markets, where because of the weak form of market efficiency, signaling impact is not well-established. This study tests this hypothesis in Indian capital markets, in terms of signaling impact due to shifts in dividend policy. The study has defined the shift in dividend policy as an increase or a decrease of dividend by 20 percent from the previous dividend payout rate. Standard event study methodology was applied on 129 such events in the selected time period and these events were further classified according to market capitalization. Large-cap stocks displayed the presence of significant abnormal returns in the pre-event period, whereas the mid-cap stocks displayed the same in the post-event period. The results of the small-cap stocks mirrored that of large-cap stocks but they are the only ones in which cumulative average abnormal returns were found to be significantly displaying the lagged response toward the event. The decrease in dividend rate by 20 percent or more did not result in average abnormal returns in either pre-event or post-event window.

scholarly journals PENGUJIAN REAKSI PASAR TERHADAP PERISTIWA MERGER DAN AKUISISI DI BURSA EFEK INDONESIA (BEI)

2017 ◽  
pp. 3325
Author(s):  
Rintohan Malau ◽  
Luh Putu Wiagustini ◽  
Luh Gede Sri Artini
Keyword(s):  
Linear Regression ◽  
Mergers And Acquisitions ◽  
Multiple Linear Regression ◽  
Market Reaction ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Market Model ◽  
Expected Returns ◽  
Sample Material ◽  
A Company

This study aimed to see whether there abnormal returns around the period of mergers and acquisitions, using a market model and the expected returns of 100 days, as well as using the event period is seven days before and seven days after the announcement of mergers and acquisitions. The sample was a company for mergers and acquisitions in Indonesia Stock Exchange during the years 2013-2015, sampling in this study did not consider the corporate Action others besides mergers and acquisitions alone, so it acquired 30 companies as the sample material, the analysis tools used in this research is multiple linear regression with Level of Singnificance by 5%. The results showed that there were no abnormal returns around the period of the study, so it can be said that there is no market reaction around the announcement of mergers and acquisitions as evidenced by a greater significance than 0.05%. Most likely this is because there is no leakage of information during the period of the study.

Market Reaction To Changes In Dividend Payments Policy In Jordan

2012 ◽  
Vol 28 (6) ◽  
pp. 1193
Author(s):  
Wasim K. Al-Shattarat ◽  
Jamal A. Al-Khasawneh ◽  
Husni K. Al-Shattarat
Keyword(s):  
Market Reaction ◽  
Value Relevance ◽  
Stock Exchange ◽  
Abnormal Returns ◽  
Market Model ◽  
Expected Returns ◽  
Dividend Payments ◽  
Adjusted Model ◽  
Model Market ◽  
Non Parametric

The purpose of this paper is to examine empirically the signalling theory for a sample of firms listed at Amman Stock Exchange (ASE) during the period 2001 to 2006. The sample consists of 215 observations. The Event Study Methodology (ESM) is employed to examine the market reaction to dividend change announcements. The nave model is used to classify the sample under four sub samples; Dividend Increase, Dividend Decrease, Dividend No Change and No Dividend No Change. The market model, mean adjusted model, market adjusted model, market model adjusted with Scholes and Williams and market model adjusted with Fowler and Rorke models are used to generate the expected returns. Also, the t-test, ZD test and Corrados non-parametric test are used to examine the significance of the mean and cumulative abnormal returns. Overall, the results show that the market reacts positively to dividend increase, dividend decrease and dividend no change announcements. In addition, the results indicate that there is no significant market reaction to dividend no change sample with zero distributions. This result indicated that there is little value-relevance to dividend change announcements. The interpretation of the positive market reaction is related to dividend release announcements rather than dividend changes. Therefore, there is some support to the signalling hypothesis to dividend release. Furthermore, applying thin trading models and non-parametric tests leads to the same conclusion.

scholarly journals Abnormal Return, Market Reaction around Rating Announcement in Tunisian Stock Market

2016 ◽  
Vol 8 (7) ◽  
pp. 322
Author(s):  
Wissem Daadaa
Keyword(s):  
Stock Price ◽  
Abnormal Return ◽  
Stock Return ◽  
Market Reaction ◽  
Stock Exchange ◽  
Price Change ◽  
Study Methodology ◽  
Book To Market Ratio ◽  
The Impact ◽  
Event Study Methodology

This paper tests the market reaction and the stock price change around rating announcements in Tunisian stock exchange using the event study methodology. We examine the impact of the change rating announcement on stock return firms from 2006 to 2010. The results show that only the negative rating with downgrades note which is associated to negative abnormal return. The market does not seem to be interested upgrades rating on the Tunisian market. The negative reaction of the market can be explained by leverage change, Book to Market ratio and the level of the rating fall.

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.

Sign in / Sign up

Export Citation Format

Share Document