Factors Influencing Abnormal Returns Around Bonus and Rights Issue Announcement

The IUP Journal of Applied Finance, Vol. 19, No. 4, October 2013, pp. 41-60

Posted: 3 Jun 2014

See all articles by Madhuri Malhotra

Madhuri Malhotra

Loyola Institute of Business Administration

M. Thenmozhi

Indian Institute of Technology Madras

G. ArunKumar

Indian Institute of Technology (IIT), Madras

Date Written: June 3, 2014

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

Malhotra, Madhuri Satsangi and Thenmozhi, M. and ArunKumar, G., Factors Influencing Abnormal Returns Around Bonus and Rights Issue Announcement (June 3, 2014). The IUP Journal of Applied Finance, Vol. 19, No. 4, October 2013, pp. 41-60. Available at SSRN: https://ssrn.com/abstract=2445299

Madhuri Satsangi Malhotra (Contact Author)

Loyola Institute of Business Administration ( email )

Loyola College
Chennai
Tamil Nadu
India
+91 044 28177191 (Phone)

HOME PAGE: http://www.liba.edu

M. Thenmozhi

Indian Institute of Technology Madras ( email )

Sardar Patel Road
Guindy
Chennai, TN Tamil Nadu
India

G. ArunKumar

Indian Institute of Technology (IIT), Madras ( email )

Sardar Patel Road
Guindy
Chennai, TN Tamil Nadu 600036
India

Register to save articles to
your library

Register

Paper statistics

Abstract Views
659
PlumX Metrics