IDEAS home Printed from https://ideas.repec.org/a/dbs/ijabfi/v4y2024i1p14-25id172.html

Do government policies impact the stock market returns? Empirical evidence from the Indian solar energy sector

Author

Listed:
  • Varun Kumar Rai

  • Ritu Sapra

  • Ashish Mathur

  • Rishi Bhushan Kumar

  • Rishabh Gupta

Abstract

This study aims to examine the impact of ambitious projects of “Pradhanmantri Suryodaya Yojana (PSY)” on ten stocks of the energy sector listed in the NSE. We examine the hypothesis using the standard event study methodology, for which we extract the data from the official website of the National Stock Exchange (NSE). We found that the announcement of the project did not significantly affect the stock price during the event window, except third trading day after the event, whereas there was a significant effect on stock prices in the post-event window. This is the first study, to the best of our knowledge, that examines the impact of the news announcement of “PSY”. It will be helpful for the researchers working in the area of event study, policy makers, investors, and corporate firms as well, because this article bridges the gap in policy decisions on energy sectors and stock reactions. This study includes the stocks listed in the NSE only, but the inclusion of more stocks can alter the results.

Suggested Citation

  • Varun Kumar Rai & Ritu Sapra & Ashish Mathur & Rishi Bhushan Kumar & Rishabh Gupta, 2024. "Do government policies impact the stock market returns? Empirical evidence from the Indian solar energy sector," International Journal of Accounting, Business and Finance, Indian Accounting Association, Patna Branch, vol. 4(1), pages 14-25.
    • Handle: RePEc:dbs:ijabfi:v:4:y:2024:i:1:p:14-25:id:172
    as

    Download full text from publisher

    File URL: https://www.ijabf.in/index.php/IJABF/article/view/172
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. McKenzie, Andrew M. & Thomsen, Michael R., 2001. "The Effect Of E. Coli O157:H7 On Beef Prices," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(2), pages 1-14, December.
    2. Ghosh Chinmoy & Rodriguez Mauricio & Sirmans C. F., 1995. "Gains from Corporate Headquarters Relocations: Evidence from the Stock Market," Journal of Urban Economics, Elsevier, vol. 38(3), pages 291-311, November.
    3. Corrado, Charles J. & Zivney, Terry L., 1992. "The Specification and Power of the Sign Test in Event Study Hypothesis Tests Using Daily Stock Returns," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(3), pages 465-478, September.
    4. A. Craig MacKinlay, 1997. "Event Studies in Economics and Finance," Journal of Economic Literature, American Economic Association, vol. 35(1), pages 13-39, March.
    5. Namgyoo K. Park, 2004. "A guide to using event study methods in multi‐country settings," Strategic Management Journal, Wiley Blackwell, vol. 25(7), pages 655-668, July.
    6. Tedeschi, Marco & Foglia, Matteo & Bouri, Elie & Dai, Peng-Fei, 2024. "How does climate policy uncertainty affect financial markets? Evidence from Europe," Economics Letters, Elsevier, vol. 234(C).
    7. Rose, Caspar, 2003. "Impact of investor meetings/presentations on share prices, insider trading and securities regulation," International Review of Law and Economics, Elsevier, vol. 23(3), pages 227-236, September.
    8. Lamdin, Douglas J., 2001. "Implementing and interpreting event studies of regulatory changes," Journal of Economics and Business, Elsevier, vol. 53(2-3), pages 171-183.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Henryk Gurgul & Milena Suliga & Tomasz Wojtowicz, 2012. "Responses of the Warsaw Stock Exchange to the U.S. macroeconomic data announcements," Managerial Economics, AGH University of Science and Technology, Faculty of Management, vol. 12, pages 41-59.
    2. Restrepo-Ochoa, Diana Constanza & Peña, Juan Ignacio, 2020. "The impact of forced divestments on parent company stock prices: Buy on the rumor, sell on the news?," Research in International Business and Finance, Elsevier, vol. 53(C).
    3. Andrieș, Alin Marius & Nistor, Simona & Ongena, Steven & Sprincean, Nicu, 2020. "On Becoming an O-SII (“Other Systemically Important Institution”)," Journal of Banking & Finance, Elsevier, vol. 111(C).
    4. Vahidin Jeleskovic & Yinan Wan, 2024. "The impact of Facebook-Cambridge Analytica data scandal on the USA tech stock market: An event study based on clustering method," Papers 2402.14206, arXiv.org.
    5. John García & Francesc Trillas, 2011. "Control corporativo y riqueza de los accionistas en el sector eléctrico europeo (2000-2007)," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 13(25), pages 297-319, July-Dece.
    6. Monica Martinez-Blasco & Vanessa Serrano & Francesc Prior & Jordi Cuadros, 2023. "Analysis of an event study using the Fama–French five-factor model: teaching approaches including spreadsheets and the R programming language," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-34, December.
    7. Sebastien Bradley & Estelle Dauchy & Makoto Hasegawa, 2018. "Investor valuations of Japan’s adoption of a territorial tax regime: quantifying the direct and competitive effects of international tax reform," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(3), pages 581-630, June.
    8. Matteo Foglia & Eliana Angelini, 2024. "A Riskmas Carol," Global Business Review, International Management Institute, vol. 25(2_suppl), pages 121-137, April.
    9. Malik, Ihtisham A. & Chowdhury, Hasibul & Alam, Md Samsul, 2023. "Equity market response to natural disasters: Does firm's corporate social responsibility make difference?," Global Finance Journal, Elsevier, vol. 55(C).
    10. Sanders, Emiel & Simoens, Mathieu & Vander Vennet, Rudi, 2024. "Curse and blessing: The effect of the dividend ban on euro area bank valuations and syndicated lending," Journal of Banking & Finance, Elsevier, vol. 163(C).
    11. Frank Thinggaard & Jan Bartholdy, 2025. "Does the Disclosure of Proprietary Information About Loan Losses Pose a Threat to Financial Stability?," Journal of Financial Services Research, Springer;Western Finance Association, vol. 68(3), pages 343-379, December.
    12. Krettek, Jonas, 2025. "Market reactions to the Basel reforms: Implications for shareholders, creditors, and taxpayers," The Quarterly Review of Economics and Finance, Elsevier, vol. 101(C).
    13. Schnabel, Isabel & Weder di Mauro, Beatrice & Schäfer, Alexander, 2013. "Financial Sector Reform After the Crisis: Has Anything Happened?," CEPR Discussion Papers 9502, C.E.P.R. Discussion Papers.
    14. Saeed Ghasseminejad & Mohammad R. Jahan-Parvar, 2020. "The Impact of Financial Sanctions: The Case of Iran 2011-2016," International Finance Discussion Papers 1281, Board of Governors of the Federal Reserve System (U.S.).
    15. Stephen Kawas & Everton Dockery, 2023. "What do we know about the stock markets’ reaction to regulatory announcements regarding financial institutions? Evidence from UK financial institutions," Review of Quantitative Finance and Accounting, Springer, vol. 60(1), pages 31-67, January.
    16. Kiesel, Florian & Ries, Jörg M. & Tielmann, Artur, 2017. "Reprint of “The impact of mergers and acquisitions on shareholders' wealth in the logistics service industry”," International Journal of Production Economics, Elsevier, vol. 194(C), pages 261-277.
    17. Nicolás S. Magner & Cinthia K. Roa, 2019. "Terrorism and Latin-American Stocks Markets," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 14(PNEA), pages 583-599, Agosto 20.
    18. Stephen G. Hall & Amangeldi Kenjegaliev, 2017. "The effect of oil price changes on the price of Russian and Chinese oil shares," Empirical Economics, Springer, vol. 53(4), pages 1639-1656, December.
    19. Barbaglia, Luca & Bellia, Mario & Di Girolamo, Francesca & Rho, Caterina, 2024. "Crypto news and policy innovations: Are European markets affected?," JRC Working Papers in Economics and Finance 2024-07, Joint Research Centre, European Commission.
    20. Ana Paula Serra, 2002. "Event Study Tests: A brief survey," FEP Working Papers 117, Universidade do Porto, Faculdade de Economia do Porto.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:dbs:ijabfi:v:4:y:2024:i:1:p:14-25:id:172. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Indian Accounting Association Patna Branch (email available below). General contact details of provider: https://www.ijabf.in/index.php/IJABF/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.