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A Study of Quarterly Earnings Announcement and Stock Price Reactions - With Reference to Nifty Midcap 150

Journal of Commerce and Accounting Research

Volume 7 Issue 4

Published: 2018
Author(s) Name: Soumya Chakraborty , Chetan G. K. | Author(s) Affiliation: Student of PGDM, Finance, Kirloskar Institute of Advanced Management Studies, Karnataka, India.
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Abstract

Market efficiency is a factor that has been marked as an important aspect since late 1950s. Researchers know three forms of EMH1 for analyzing market efficiency. Many researchers like (Akinyi & Melissa, 2017), (Kendirli & Elmali, 2016), (Shah & Arora, 2014), (Suwanna, 2012), and (Yvonne & Mukora, 2014) had tried to identify the relationship between corporate announcements like earnings, dividend declaration, and the latter’s impact on the market as a performance indicator. In this paper, we have tried to examine the impact of quarterly results on Nifty Midcap 150 index. The study is based on quarterly announcement of financial results for 148 companies. The whole portfolio is classified as good-news and bad-news portfolio on the basis of comparative study of quarterly financial results announcement with the same time period as of previous year. In good-news portfolio, there is an increase in the percentage of net profit as compared to the same quarter of previous year. We have used t-test, Sign and Runs test for checking of hypothesis. AARs2 and CAARs3 have been found to be mostly positive rather than negative and the market is found to be efficient under the semi-strong form.

Keywords: Event Study, Efficient Market Hypothesis (EMH), Average Abnormal Return (AAR), Nifty Midcap 150, Quarterly Earnings Announcement

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