An Empirical Analysis of Stock Market Reaction Around Bonus Issue Announcement in the Colombo Stock Exchange: An Empirical Study Based on the Period of 2003–2007
Pratheep Francis Xavier II
SAMPATH BANK PLC
September 23, 2011
This study examines the stock price reaction to the information content of bonus issue with the view of the Srilankan Stock Exchange is semi-strong efficient or not. The period of the study is January 2003 to April 2007. Sample of 67 bonus issues made by both financial and non-financial sector companies have been used to study the announcement effect. Standard event study methodology of Brown and Warner (1985) is employed to find the results. The results indicate that there are significant negative abnormal returns for the pre-announcement period. On the announcement day the AAR is -0.82% is observed. There is no significant difference observed in the financial and non-financial sectors. The results provide stronger evidence of semi-strong market efficiency of the Colombo Stock Exchange.
Keywords: price reaction, standard event study, abnormal returns, bonus issue announcement
JEL Classification: M52, G24
Date posted: September 23, 2011
© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollobot1 in 0.156 seconds