Stock market reaction to Hindenburg research report and judicial intervention in Adani Group

Background: This study investigates the stock market reaction of nine listed Adani Group companies to two sequential information events, the publication of the Hindenburg Research report and the subsequent Supreme Court judgment, to examine how investors revised their expectations following adverse corporate allegations and judicial developments. Methods/Approach: The study employs the event study methodology using a 21-day event window to analyse abnormal stock returns surrounding the publication of the Hindenburg Research report on 24 January 2023 and the Supreme Court judgment on 3 January 2024. Three market models were used to estimate abnormal returns and evaluate the statistical significance of the market reaction. Results: The findings indicate that the Hindenburg Research report generated negative stock price movements across all nine listed Adani Group companies. However, statistically significant abnormal returns were observed only for Adani Green Energy Ltd., Adani Enterprises Ltd., Adani Wilmar Ltd., Adani Power Ltd., and Adani Total Gas Ltd. Among the companies, Adani Total Gas Ltd. experienced the largest cumulative decline, with its share price falling by approximately 83% by 28 February 2023. Following the Supreme Court judgment, a statistically significant positive abnormal return was observed only for Adani Power Ltd. Conclusion: The findings demonstrate that activist short-seller reports can substantially influence investor behaviour and stock prices, while subsequent judicial developments may only partially mitigate the adverse market reaction. The study provides practical implications for investors, corporate managers, regulators, and policymakers regarding information credibility, corporate governance, and market efficiency.