Impact of Stock Splits and Rights Issue Announcements on Market Price: Evidence from India

Rohit, Babitha; Pinto, Prakash; Bolar, Shakila

doi:10.21863/drishtikon/2016.7.2.014

Cited by 17 publications

(25 citation statements)

References 27 publications

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“…The test revealed that in terms of the effect of market reaction on right issue in growing company, it is empirically proven that that there was no significant difference in stock prices before and after the rights issue in growing company. Rohit et al (2016) did not find any significant impact from the rights issue announcement. Furthermore, in relationshio between market reaction on right issue in non-growing energy consuming companies, the t-test results showed that there were no significant differences in stock prices and trading volumes before and after the rights issue in nongrowing energy consuming companies.…”

Section: Resultsmentioning

confidence: 75%

“…Bello (2016) showed a positive and significant cumulative abnormal return (CAR) on the equity issue announcement day which also include secondary equity offerings conducted through a rights issue. However, Rohit et al (2016) did not find any significant impact from the rights issue announcement.…”

Section: Based On the Tablementioning

confidence: 70%

“…However, El Ansary and Hussien (2017) found a significant difference in This Journal is licensed under a Creative Commons Attribution 4.0 International License abnormal returns before and after the stock split announcement. Rohit et al (2016) found that the market did not react significantly to the stock split announcement on the bombay stock exchange because the abnormal return found around the announcement was not significant.…”

Section: Introductionmentioning

confidence: 97%

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Market Reactions on Corporate Actions in Growing and Nongrowing Energy Consuming Companies

Nurwulandari

Hasanudin²,

Melati³

2021

IJEEP

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This paper aims to analyze the market reactions on corporate actions in the form of split-up, reverse split, right issue, and mergers and acquisitions in growing and non-growing energy consuming companies in Indonesia. The market reaction is analyzed based on stock price, trading volume, and abnormal returns movements using paired sample t-tests from the results of the event study for 5 days before and after corporate actions in the form of split-up, reverse split, right issue, and mergers and acquisitions. The results showed that stock prices reacted positively on the split-up in growing energy consuming companies, while in non-growing energy consuming companies, stock prices did not react significantly. However, the abnormal returns of growing and non-growing energy consuming companies both showed a negative movement, while the trading volumes did not react significantly. This paper specifically analyzes the market reaction on corporate actions in growing and non-growing energy consuming companies to provide interesting insights about the different reactions given by the market to corporate actions carried out by the companies with different growth categories.

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Section: Resultsmentioning

confidence: 75%

Section: Based On the Tablementioning

confidence: 70%

Section: Introductionmentioning

confidence: 97%

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Market Reactions on Corporate Actions in Growing and Nongrowing Energy Consuming Companies

Nurwulandari

Hasanudin²,

Melati³

2021

IJEEP

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“…Kendirli & Elmali (2016), and Mariko (2016), who stated that the announcement of rights issue had no effect on stock prices as indicated by no change in the average abnormal return. Rohit et al, (2016), explains that there is no impact from the announcement of the rights issue in India which indicates the Indian capital market is half-strong (semi-strong form). Wiagustini et al, (2017), concluded that there was no difference in abnormal return both before and after the announcement of the rights issue so that the Indonesian capital market was classified as semi-strong.…”

Section: Methodsmentioning

confidence: 99%

Market reaction to the rights issue announcement on the Indonesia stock exchange

Dewi

Candraningrat

2019

irjmis

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Rights issue or the issuance of pre-emptive rights are the rights granted by an issuer company made to its existing shareholders to buy new shares issued within a predetermined period of time. This study aims to empirically explain the differences in abnormal returns before and after the announcement of the rights issue and to determine the form of capital market efficiency in Indonesia. Data are collected from 27 listed companies in the Indonesia Stock Exchange (IDX) that conducted a rights issue in 2014-2018. The data analysis technique used is the Kolmogorov-Smirnov Normality Test and the Parametric Statistical Test with a paired sample t-test. Based on the results of hypothesis testing not found differences in abnormal returns both before and after the announcement date indicating the market does not react to the right issue event. The results of statistical tests show a downward trend of abnormal return which is proxied in the Cumulative Abnormal Return (CAR), implying a market tends to react negatively to the announcement of the rights issue. Rights issue information causes a new equilibrium price adjustment in the market, thus making the form of efficiency of the Indonesian capital market a semi-strong form.

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“…Some investors try to increase the return (abnormal return) to get more profit. Research by Epriyeni (2014) and Rohit et al (2016), concluded that there was a difference in return around the announcement of the right issue. Therefore, the researcher developed a hypothesis, namely: H1: There is an abnormal return at the time of the announcement of the right issue, before and after the announcement of the right issue.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

Analysis Semi-Strong Efficiency Market Testing Through of Right Issue Influence on Abnormal Return in Emitens Indonesia Stock Exchange Period 2017-2019

Pathonah¹,

Purwanto²,

Ermawati³

2021

Proceedings of the 1st International Conference on Sustainable Management and Innovation, ICoSMI 2020, 14-16 September 2020, Bo

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This study aims to see the semi-strong-efficient form of the Indonesian capital market in the context of announcing rights issues. This study used 40 companies that conducted rights issues during 2017 -2019. To prove market efficiency, study uses abnormal returns with a normality test kolmogorov-smirnov. Based on the hypothesis test there is no significant difference in expected return but there are significant differences in the actual return and CAAR. The results of the analysis concluded that the right issue announcement information has information that causes differences in investor preferences that are reflected in changes in stock prices that can result in changes in abnormal returns before and after the right issue event. Rapid reaction by the market to the information received so that it is fast in decision making and empirical results show that Indonesian capital market is expressed as semi-strong form of market efficiency.

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Impact of Stock Splits and Rights Issue Announcements on Market Price: Evidence from India

Cited by 17 publications

References 27 publications

Market Reactions on Corporate Actions in Growing and Nongrowing Energy Consuming Companies

Market Reactions on Corporate Actions in Growing and Nongrowing Energy Consuming Companies

Market reaction to the rights issue announcement on the Indonesia stock exchange

Analysis Semi-Strong Efficiency Market Testing Through of Right Issue Influence on Abnormal Return in Emitens Indonesia Stock Exchange Period 2017-2019

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