IMPACT OF RESULT ANNOUNCEMENTS ON THE PERFORMANCE OF STOCK PRICES: A STUDY OF BANKING STOCKS

Abstract

Announcement of results is said to be delivering the information of performance to its stakeholders. Quarterly results are being disclosed which shows the clear position of the company. If earnings are higher than previous quarters it is being enjoyed by the market and higher earnings are imbibed with the higher returns as well. The quarterly results are like a report card which shows the financial health of the company. This disclosure provides the information of any changes from previous quarter and it also reflects the material events if it has happened in that company. The announcements of result are specific and unique to every company. For the purpose of this event study which examines the effect of event (result announcement) on stock prices, event windows is limited to 31 days in which returns are calculated for 30 days. The study will reveal the abnormal returns during the period of pre and post announcement of results. The research work is based on the stock prices movement of banks which are listed in Bombay Stock Exchange (BSE). Banks will be selected. The 15 days period prior to announcement and 15 days period post announcement will be taken for the purpose of the study. The paper will analyze whether these announcement helps investors in gaining the returns in shorter or a longer while.