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Factors Influencing Abnormal Returns Around Bonus and Rights Issue Announcement

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  • Madhuri Malhotra
  • M Thenmozhi
  • Arun Kumar Gopalaswamy

Abstract

This paper examines the factors influencing abnormal returns around bonus and rights issue announcements. The results of the study indicate that market condition and type of industry have significant influence on abnormal returns and the bonus ratio does not have any significant effect on abnormal returns. For rights announcement, issue size and market conditions have a significant impact on returns. Firm size, operating leverage, debt-equity ratio and volatility of stock returns are the other firm-related factors that have a significant impact on stock returns around bonus announcement. But for rights issue, only firm size is the significant firm-related factor which has a positive impact on the returns.

Suggested Citation

  • Madhuri Malhotra & M Thenmozhi & Arun Kumar Gopalaswamy, 2013. "Factors Influencing Abnormal Returns Around Bonus and Rights Issue Announcement," The IUP Journal of Applied Finance, IUP Publications, vol. 19(4), pages 41-60, October.
    • Handle: RePEc:icf:icfjaf:v:19:y:2013:i:4:p:41-60
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    Cited by:

    1. Kenneth Marangu & Stephen Muathe & Lucy Mwangi, 2019. "Firm Factors and Share Returns of Secondary Equity Offers at Nairobi," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(6), pages 107-107, June.

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