Impact of Corporate (Bonus Issue) Action on Stocks in India

Abstract

Bonus issue is the one of the corporate action where companies issue the stocks to existing shareholders at a free of cost. Bonus announcement or proportion of the bonus may stimulate the investors to buy or sell of the shares before and after of ex-bonus issue date and this may cause the abnormal returns in the stock around ex-bonus issue date. In this paper tries to understand the abnormal returns around ex-bonus issue by using companies which declared ex-bonus issue in the year 2017 in India. Researcher has selected 9 companies randomly from the companies which declared ex-bonus issue in the year 2017 to test the abnormal returns around ex-bonus issue and used event study and t test used to test the significance of bonus issue impact on share price.

Keywords: Abnormal returns, Corporate actions, Event study, Stocks, Bonus issue

JEL Classification: G14