Renuka Sharma1 and Ramesh Chander2

1RIMT-IMCT, Near Floating Restaurant, Mandi Gobindgarh - 147301, Punjab, India
2University School of Management, Kurukshetra University, Kurukshetra - 132119, Haryana, India
1E-mail: bhavyarenuka@rediffmail.com 2E-mail: rameshchandra2005@rediffmail.com

Abstract

In the stock market, the announcement of an event may be more significant than the occurrence of the event as the investors’ perceptions get revolutionized by these announcements and it gets reflected through the movement in the stock price behavior. The various accounting information, having significant impact on the investors’ perceptions, include earnings announcements, dividend and right issues, stock splits, mergers, takeovers etc. The present study has examined the impact of earnings’ announcement on the stock price behavior in India. The past studies have provided a blend of evidences on hand regarding the adjustment of stock-prices for the earnings announcements. It can be ascertained from the analysis that the investors definitely react to the earnings announcements in a different way under the diverse market conditions. The long term analysis made in the first segment of the study has not shown any inconsistency in the stock price behavior which results into any kind of informational inefficiency.

Keywords: Earnings Announcements, Informational Efficiency, CAPM, Event Study, AAR.