Stock Market Efficiency Around Private Placement Announcements in India

International Journal of Research in Management and Social Science, ISSN 2322-0899, Vol 5(2), April-June 2017

14 Pages Posted: 21 Jun 2017

See all articles by Madhuri Malhotra

Madhuri Malhotra

Loyola Institute of Business Administration

Lakshmi Elangovan

Madras School of Economics

Date Written: June 20, 2017

Abstract

This study examines the stock price reactions around private placements announcement in India. The sample consists of information technology and infrastructure sector from India. Event study methodology is used to analyze the announcement impact of private placements. Results suggest that Information technology firms on an average, yield positive average abnormal returns around private placement announcement. During the announcement window (one day before and after the announcement), firms reflect negative abnormal return. The study supports signaling hypothesis and concludes that Indian stock market is semi-strong form efficient as the news induced in the stock market is reflected in the stock prices. These results are consistent with studies conducted in United States, Sweden, Canada, and New Zealand.

Keywords: Private Placement, Announcement of Issue

JEL Classification: G32

Suggested Citation

Malhotra, Madhuri Satsangi and Elangovan, Lakshmi, Stock Market Efficiency Around Private Placement Announcements in India (June 20, 2017). International Journal of Research in Management and Social Science, ISSN 2322-0899, Vol 5(2), April-June 2017. Available at SSRN: https://ssrn.com/abstract=2989625

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

Lakshmi Elangovan

Madras School of Economics ( email )

Gandhi Mandapam Road
Behind Government Data Center, Kottur
Chennai, Tamil Nadu 600025
India

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