An Empirical Analysis of Stock Price Behaviour Around Bonus Issue Announcement in India

Corporate actions announcement is usually assumed to offer good news to participants in market. In case of fictitious corporate action such as Bonus share issue, tend to react on market price positively or negatively. In light of this, present study aims to investigate the impact of Bonus Issue announcement on Indian stock market for the period of five years from 2014 to 2018. We applied event study methodology using a sample size of nine companies from BSE. Percentage Analysis, CAGR (Compounded Annual Growth Rate), Mean, Standard Deviation, Regression Analysis and t-test as statistical tools have been used to analyse and interpret the data. Investigation window (t-10 to t+10) taken for all bonus issue announcement event to test the abnormal return considering nine companies. The result reveals that Indian Stock market does not react to bonus share issue announcement. Thus, this paper contributes to the fact that there is no significant effect on stock price when a company announces the issue of bonus shares