Impact of Automobile Regulations on Shareholders’ Wealth : Indian Empirical Evidence

The world faces the arduous task of reining in pollution. The pursuit of development agenda fuels more pollution. The economic reforms of 1991 put the Indian automobile on a higher growth trajectory. The resultant increase in vehicular pollution drew the attention of the court of law and regulators. The present study captures the impact of various policy reforms initiated to achieve sustainable development in the automobile sector during the period 1999–2017. Lack of industry readiness led to negative cumulative abnormal returns on introduction of emission standards I, II, and III in 1999, 2005, and 2010, respectively. The automobile industry registered a significant negative CAR of 1.49 per cent in the (0, 0) window at the time of introduction of emission standards IV in 2017 and erosion of Rs 88,390 million of shareholders' wealth