STOCK PRICE RESPONSE TO BONUS SHARE ANNOUNCEMENT- EVIDENCE FROM NSE, INDIA

Corporate events have considerable effect on the movement of stock price that attracts lots of research. Likewise, Bonus share is one of the significant events in company and brings volatility to the stocks. The present study focuses on response of stock price movement to the announcement of bonus share. A study focused on 4 selected stocks having bonus share announcement between October 2019 to March 2021. A standard event study methodology was used to analyze the response of bonus share announcement on abnormal returns (AR) for the sample stocks surrounding forty one days of the announcement date (including announcement date). Average abnormal returns (AAR) and cumulative average abnormal returns (CAAR) were computed. Paired t-test was used for analyzing significance of bonus share announcement on AAR. From the study, it can be inferred that bonus share announcement has shown negative significant impact on AAR.