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Stock Price Reaction to Bonus Share Announcements in India

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  • Karamjeet Kaur
  • Balwinder Singh

Abstract

Corporate financial policy announcements like stock dividend, stock splits, dividend changes, repurchase of shares, etc. create value to the shareholders through stock price changes. This study employs the standard event study methodology to examine the reaction of stock market to 159 bonus share announcements of Indian companies listed on BSE from January 1999 to December 2004. The results indicate that there are significant positive abnormal returns around the bonus share announcements. Further, cross sectional regression analysis finds support for signaling and optimal price hypothesis. However, undervaluation or attention hypothesis is rejected.

Suggested Citation

  • Karamjeet Kaur & Balwinder Singh, 2009. "Stock Price Reaction to Bonus Share Announcements in India," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 34(2), pages 202-226, May.
    • Handle: RePEc:sae:manlab:v:34:y:2009:i:2:p:202-226
    DOI: 10.1177/0258042X0903400203
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    References listed on IDEAS

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