A Study on Event Analysis in Stock Market With Reference To Corporate and

Economic Events
Dr. Chandrakala V Dr. S.Oviya
Professor, P.G.Dept.of Commerce Professor, P.G.Dept.of Commerce
BMS COLLEGE FOR WOMEN BMS COLLEGE FOR WOMEN
Email Id: [email protected] email Id: [email protected]
Mobile no: 9880668840 mobile no: 9731733419
Abstract:
An event study is a statistical method to assess the impact of an event on the stock market performance. The
event analysis is used to analyse and understand the effects of economic and corporate event on the
direction and magnitude of stock price changes, and it is very versatile. Event studies are thus common to
various research areas, such as accounting and finance, management, economics, marketing, information
technology, law and political science. Event analysis has a long history and has many applications.

Event studies have been a major focus of prior research because they provide a powerful setting to examine
the informativeness of an event as assessed by market participants. An event study first requires identifying
the event of interest, e.g., disclosure of the purchase of a particular type of software. After the event is
defined, the period of time over which the stock price of the firm experiencing the event is determined. Then,
the stock price changes beyond the “normal” or expected changes, in response to the event announcement,
are examined to determine the extent to which the event changes the market participants' evaluation of the
firm.

Key words: Event analysis, stock market, economic events, corporate events.

Introduction:

Event studies are based on the theoretical framework of efficient capital markets and the notion that security
prices include all information available to the market. As a result, announcements made by firms provide to
market participants information that can be impounded into the market price.

In most cases, one focuses on the announcement of a major corporate action (M&A transaction, earnings
announcement, accounting event, strategic alliance, bankruptcy filing, R&D break-through, etc.), as it
releases new information to the stock market rather than the actual underlying event that will often take
place much later. Often the announcements are statistically significant while the actual events are statistical
non-events.

As new information is made available to the market, e.g., in the form of announcements about a firm's use of
information technology, investors are expected to impound this information into the firm's stock price to
capture the expected effect of the new information on the firm's value. As a result, the incremental effect of
the information announcement on the value of the firm can be observed.
Event studies have been widely used in virtually all business and economics disciplines. Perhaps the first
event study was published by Dolley(1933), who investigated the effect of stock splits on stock prices.
The modern methodology of event studies was initiated by Ball and Brown (1968) and Famaetal (1969), but
the methodology has continued to evolve over time MacKinlay (1997), Binder (1998), Kothari and Warner
(2006), and others provide analyses of event studies in finance.
Researchers in strategic management have increasingly employed finance methodologies including event
studies to assess the impact on corporate wealth of various announced events, including restructuring,
changes in leadership, and mergers and acquisitions.
An event is something that happens, especially when it is unusual or important. You can use events to
describe all the things that are happening in a particularsituation.

Economic events-Economic events are relevant events that have economic significance to a particular
company, country and include any occurrence that affects its financial condition and its overall performance.
Events of general economic significance, like interest rate spread, unemployment rate, consumer price index,
industrial index, crude prices and other relevant events.

Statement of the problem:

The event analysis has many applications. In accounting and finance research, event analysis has been
applied to a variety of firm specific and economy wide events.
In this research event analysis is done to understand how the economic and corporate events have an impact
on the performance of the stock market.
Objective:
Every work done has an objective and the present study is no way an exception, the various objective of the
study has been enlisted as follows-
 To study and understand the primary concept of event analysis in stock market.
 To study the impact of economic and corporate events on stock market.
Scope of the study:
 The study attempts to understand the impact of the occurrence of corporate and economic events only
on stock market. This helps in analysing the performance of the stock market and value of the
company share.
 Data from the year 2011- April 2017 is considered for the study, which are of the nature of corporate
and economic events.
Review of literature:
 Michelle and Shiguang (2001) issues with a high bonus ratio (number of bonus shares in the
issue/number of existing shares) usually attract positive returns and the issues with a low bonus ratio
are rewarded with negative returns. From the literatures we can say that several researchers have
been supported that the dividend announcements impact on the share price of the firm positively or
negatively.
 ‘BONUS ISSUE ANNOUNCEMENTS AND ITS IMPACT ON SHARE PRICES OF
COLOMBO STOCKEXCHANGE (CSE) IN SRI LANKA’.
 Sheppard(2008) A company's dividend policy provides guidance on when to pay stockholders
dividends or when not to pay the dividends and use profits for other purposes. When profits are held
and not paid out as dividends, funds can be used for new product development, market expansion, or
acquisition of other companies.
Azhagaiah&Priya(2008) Dividends can be paid for several reasons. In some cases, dividends are
paid to satisfy existing stockholders.
‘Dividend Policy Research Paper Starter’.
 According to Ritter (1991) the wealth relative to three years after a rights issue is 0.80 which falls to
0.70 by the fifth year. This essentially means that companies put up rights issues when at their prime
or undergoing major long term restructuring. This drives the market against a largely bullish investor
market at the time of a rights issue.
‘What Is the Effect of Rights Issue on Firms Share Performance in the Nairobi Securities
Exchange?’,ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online) Vol.5, No.4, 2014.
 The "free cash flow" theory developed by Jensen (1988) provides a good example of intermediate
objectives that can lead to greater profitability in the long run. This theory assumes that corporate
shareholders do not necessarily share the same objectives as the managers. The conflicts between
these differing objectives may well intensify when corporations are profitable enough to generate
"free cash flow," i.e., profit that cannot be profitably re-invested in the corporations. Under these
circumstances, the corporations may decide to make acquisitions in order to use these liquidities.
‘MERGERS AND ACQUISITIONS IN INDIA: A STRATEGIC IMPACT ANALYSIS FOR
THE CORPORATE ENTERPRISES IN THE POST LIBERALISATION PERIOD’.
 Fama et al (1969)also note that stock prices appear to adjust to new information. Stock splits
generally occur following periods when stock prices significantly increase relative to the market.
They found that, after a split announcement, stock prices seem to quickly reflect all available
information and do not generate any abnormal returns. The results demonstrate the efficiency of the
capital market.
http://www.jba.tbs.tu.ac.th/files/Jba130/Article/JBA130Thitima.pdf
 Demirguc-Kunt and Huizinga (1998) examine interest spreads using cross-country data covering
commercial banks from 80 countries across the world. They find that differences in interest margins
and bank profitability are explained by several factors such as bank characteristics, macroeconomic
variables, explicit and implicit bank taxation and deposit insurance regulation. After controlling for
factors such as differences in bank activity, the extent to which banks are leveraged, and the
macroeconomic environment, they show that lower interest margins and lower profits are associated
with larger banks asset to GDP ratio and a lower market concentration ratio.
‘Review of Development Finance’, volume 4, issue 2, December 2014, Pages 73–82.

Methodology:
The method adopted for this study is the descriptive research. Descriptive research is the study of existing
facts to come to a conclusion. In this research attempt has been made to analyse the role and impact of
economic and corporate events on the performance of the stock market.
The influence and relation between the data collected will be calculated using statistical correlation formula,
which helps in understanding whether there exists a positive/negative/zero relation.
Data source:
The data is collected purely on secondary basis, from the following sources-
 E- journals,E-articles,Inflibnet, Google, Google scholar ,Internet websites,NSE, Text books
Data analysis and interpretation:
Data analysis and interpretation is the process of assigning meaning to the collected information and
determining the conclusions, significance, and implications of the findings.
The collected data is analysed with the help of MS-Excel, using correlation coefficient formula and averages
for certain events.
The analysed data is presented with the help of tables, the same will be graphically presented.
Limitations of the study:
 Study is confined only to the selected events, since they have a major impact on stock market.
 The study is restricted only from 2011 to April 2017.
 All the events are not taken for the purpose of study.
CORPORATE EVENTS:-
TABLE NO.: 1
TABLE TITLE: Table showing impact on stock market, due to Kotak Mahindra Bank Ltd., acquiring
ING Vysya Bank on 16.05.2016:
15 days Kotak 15 days Kotak Stock price of Kotak Mahindra Bank
Mahindra Bank Mahindra Bank % of increase or Ltd., on 16.05.2016: Opening price=
Ltd., stock prices Ltd., stock prices decrease before and Rs.708.9 ; Closing price= Rs.718.25
before acquisition after acquisition after acquisition Correlation coefficient= -0.13537
(in Rs.) (in Rs.) ANALYSIS:
708.9 680.45 0 0 The correlation coefficient computed
708.9 700.85 2.91 0
706.05 712.5 1.64 -0.4 from the table has a negative value,
702.15 701.45 -1.58 -0.56 which means the performance of the
703.15 717.15 2.19 0.14
698.4 718.2 0.15 -0.68 stock market and Kotak Mahindra Bank
712.75 707.45 -1.52 2.01 Ltd., after acquiring ING Vysya Bank
730.2 712.65 0.73 2.39 both move in opposite direction
742.55 709.15 -0.49 1.66
742.6 702.95 -0.88 0.01 respectively, and both are negatively
746.55 713.85 1.53 0.53 correlated. The table also shows that
745.35 722.85 1.25 -0.16
746.3 731.55 1.19 0.13 stock price before acquisition is more
769.3 726.75 -0.66 2.99 when compared to the stock prices after
765.25 708.25 -2.61 -0.53
acquisition.
Graph No.1
Graph showing impact on stock market, due to Kotak Mahindra Bank Ltd., acquiring ING Vysya
Bank on 16.05.2016:

INTERPRETATION:
From the above graph we come to know that the stock performance of Kotak Mahindra Bank Ltd., before
acquiring ING Vysya Bank was good and was increasing day by day. But on the other hand more
fluctuations and gradual decrease in the value of Kotak Mahindra Bank Ltd., stock after the acquisition can
be seen, reason being for the decrease in stock performance can be that it has to pay more for the bought up
firm which in turn reduces the net worth of the buying firm. If the acquired firm has debts, it becomes
burden for the acquiring firm.

TABLE NO.: 2
TABLE TITLE: Table showing impact on stock market, due to the Management Conflict between
TCS Ltd., and Cyrus Mystri press released on 24.10.2016:

15 days TCS Ltd., % of increase or Stock price of TCS Ltd., on

stock prices 15 days TCS Ltd., decrease before 24.10.2016: Opening price=Rs.2428.2 ;
before stock prices after and after Closing price=Rs.2427.7
Management Management Management Correlation coefficient= -0.46269
Conflict (in Rs.) Conflict (in Rs.) Conflict ANALYSIS:
2437.8 2398.45 0 0 It is clear from the table that the prices
2430.8 2396.25 -0.29 -0.09 of the TCS Ltd., stock before the conflict
2411.7 2418.1 -0.79 0.09
2405.15 2398.7 -0.27 -0.81 between TCS Ltd., and its former CEO
2386.35 2391.05 -0.79 -0.31 Cyrus Mystri is more when compared to
2388.75 2350 0.1 -1.75
2367.8 2304.05 -0.88 -1.99 the stock prices after the conflict coming
2380.3 2319.45 0.53 0.66 into lime light. The performance of the
2328.9 2330.55 -2.21 0.48
2366.2 2277.05 1.58 -2.35 stock and stock market moves in
2362.45 2283.2 -0.16 0.27 opposite direction which are negatively
2400.2 2169.85 1.57 -5.22
correlated, even though there is a
2395.1 2155.45 -0.21 -0.67
2401.15 2101.15 0.25 -2.58 minimal decrease in the stock price by
2428.65 2121.3 1.13 0.95 the end of the day.

Graph no.2
Graph showing impact on stock market, due to the Management Conflict between TCS Ltd., and
Cyrus Mystri press released on 24.10.2016:
INTERPRETATION:
After the conflict coming into lime light there is a downfall in the stock price, whereas the stock was
performing well before the conflict. The reason the down fall of the stock price may be because of TCS Ltd.,
sacking Cyrus Mystri from CEO ship all of a sudden without giving any explanation, which in turn created
tension in the minds of the investors and causing a down fall.
TABLE NO.: 3
TABLE TITLE: Table showing the impact on stock market, due to the JSW Steel Ltd., Stock Split on
face value of equity shares of the company on 04.01.2017:

13 days JSW Steel 13 days JSW Steel

Ltd., stock prices Ltd., stock prices % of increase or
before Stock split after Stock split decrease before and Stock price of JSW Steel Ltd., on
(in Rs.) (in Rs.) after Stock split 04.01.2017: Opening price= 166.75 ;
1630.15 175.65 0 0 Closing price= 163.05
1598.95 178.45 -1.95 1.57 Correlation coefficient= 0.231483
1591.6 187.55 -0.46 4.85
1586.2 188.5 -0.34 0.5 ANALYSIS:
The stock market performance and the
1566.6 188.9 -1.25 0.21
1568.05 189.35 0.09 0.24 JSW Steel Ltd., stock moves in the
1532.7 186.7 -2.31 -1.42 same direction and is positively
1580.2 191.1 3.01 2.3
1585.15 192.65 0.31 0.8 correlated, even though there is a
1599.75 185.65 0.91 -3.77 minimal decrease in the stock price at
1627.5 194.15 1.71 4.38 the end of the day after splitting their
1634.3 193.95 0.42 -0.1
1644.55 196.15 0.62 1.21 stock.

Graph no.3
Graph showing the impact on stock market, due to the JSW Steel Ltd., Stock Split on face value of
equity shares of the company on 04.01.2017:

INTERPRETATION:
The performance of the JSW Steel Ltd., stock was good compared to the performance after splitting the
stock. The price of the stock has also been reduced after the stock split because of the division of a share into
shares, the division takes place in a way that the total market capitalisation of the stock post-split remains the
same.
TABLE NO.: 4
TABLE TITLE: Table showing the impact on stock market, due to the Rights Issue by Kingfa Science
& Technology (India) Ltd., to equity shareholders as on 22.02.2017:

15 days Kingfa Stock price of Kingfa

Science & 15 days Kingfa % of increase or Science & Technology
Technology (India) Science & Technology decrease before and (India) Ltd., on 22.02.2017:
Ltd., stock prices (India) Ltd., stock after Rights Issue Opening price= Rs.872 ;
before Rights issue prices after Rights Closing price= Rs.874.05
(in Rs.) issue (in Rs.)
844.15 877.2 0 0 Correlation coefficient:
- 0.424382
840.2 867.65 0.47 -1.1 ANALYSIS:
845.5 840.65 0.63 -3.21 The table shows that there
848.65 852.35 0.37 1.37
- exists a positive correlation
847.75 844.4 0.11 -0.94 between the performance of
-
846.35 848.65 0.17 0.5 the stock market and Kingfa
859.7 865 1.55 1.89 Science & Technology
-
859.35 866.8 0.04 0.21 (India) Ltd., where both
- move in same direction.
854.7 863.85 0.54 -0.34
After the announcement of
-
810.4 815.6 5.47 -5.92 rights issue there has been an
786.8 810.8 -2.1 -0.59
increase in the stock price of
797.45 797.15 1.34 -1.71
800.05 792.3 0.32 -0.61 Kingfa Science &
808.6 797.6 1.06 0.66 Technology (India) Ltd., by
864.35 787.05 6.45 -1.34
the end of the respective day.
Graph no.4
Graph showing the impact on stock market, due to the Rights Issue by Kingfa Science & Technology
(India) Ltd., to equity shareholders as on 22.02.2017:

INTERPRETATION:
Before the announcement of rights issue the stock prices of Kingfa Science & Technology (India) Ltd., was
high with less fluctuations. But after the rights issue it has decreased from a high point to low point with
major fluctuations reason being rights are issued only to the existing shareholders, for shareholders the
earnings per share will reduce since there are more shares for the same earnings, and so will be the
dividends.
ECONOMIC EVENTS:-

TABLE NO.: 5
TABLE TITLE: Table showing the impact on stock market, due to BREXIT as on 24-06-2016:

% of Market index as on 24-06-2016:

15 days NSE 15 days NSE increase/decrease Opening= 8029.1; Closing= 8088.6
market index market index after before and after
before BREXIT BREXIT BREXIT Correlation coefficient: −0.29256
8220.8 8094.7 0 0 ANALYSIS:
8201.05 8127.85 -0.24 0.41 The table depicts that the performance
8266.45 8204 0.79 0.93
273.05 8287.75 0.08 1.01 of stock market and happening of
8203.6 8328.35 -0.85 0.49 international economic event has
8170.05 8370.7 -0.41 0.51 negative correlation, and both move in
8110.6 8335.95 -0.73 -0.42
8108.85 8337.9 -0.02 0.02 opposite direction. Even though the
8206.6 8323.2 1.19 -0.18 closing index of the market has
8140.75 8467.9 -0.81 1.71
increased due to BREXIT, it is
8170.2 8521.05 0.36 0.62
8238.5 8519.5 0.83 -0.02 negatively correlated with the market.
8219.9 8565 -0.23 0.53
8203.7 8541.4 -0.2 -0.28
8270.45 8508.7 0.81 -0.38

Graph no.5
Graph showing the impact on stock market, due to BREXIT as on 24-06-2016:
INTERPRETATION:
In spite of the negative correlation between the stock market and the impact of BREXIT, the market has
shown good and increasing
15 days NSE % of increase or performance, but for a short-term with
market index 15 days NSE decrease before and fluctuations.
before Trump market index after after Trump
Market index before the BREXIT is
winning president Trump winning winning president
ship president ship ship expectedly low and has huge
fluctuations.
8677.9 8432 0 0
The reason for the short-term changes
8659.1 8525.75 -0.22 1.1
in the market can be due to pound
8699.4 8296.3 0.46 -2.77 value depreciating, impact on all asset
8693.05 8108.45 -0.07 -2.32 classes available in stock market,
8708.95 8111.6 0.18 0.04 inflow and outflow in the market etc.,
8691.3 8079.95 -0.2 -0.39 TABLE NO.: 6
8615.25 8074.1 -0.88 -0.07 TABLE TITLE: Table showing the
impact on stock market, due to
8615.25 7929.1 0 -1.83
Donald Trump winning USA
8638 8002.3 0.26 0.91 President ship as on 08.11.2016:
8625.7 8033.3 -0.14 0.39 Market index as on 08-11-2016:
8626.25 7965.5 0.01 -0.85 Opening= 8540; Closing=8543.55
Correlation= −0.35027
8514 8114.3 -1.32 1.83
8484.95 8126.9 -0.34 0.16 ANALYSIS:
8433.75 8142.15 -0.61 0.19
8497.05 8224.5 0.74 1
The above table shows negative correlation between the performance of the market and Donald Trump
winning USA President ship, and both move in opposite direction. The closing market index has increased a
bit by the end of the day of Trump winning elections in USA.

NSE market Graph no.6

index before NSE market NSE market Graph showing the impact on stock market,
Demonetisation index during index after due to Donald Trump winning USA President
(from Demonetisation Demonetisation ship as on 08.11.2016:
September (from (from January
2016-October November 2017-February INTERPRETATION:
2016) 2016-December 2017)
2016) NSE market index was performing good before
8774.65 8626.25 8179.5 Trump winning elections with less fluctuations,
8809.65 8514 8192.25
8943 8484.95 8190.5 but after Trump winning the market has come
8917.95 8433.75 8273.8 down and gone up for a short-term, again a deep
8952.5 8497.05 8243.8
8866.7 8543.55 8236.05 fall can be seen in the graph which goes up a bit
8715.6 8432 8288.6 in the later days.
8726.6 8525.75 8380.65
This fluctuation can be due to the occurrence of
8742.55 8296.3 8407.2
8779.85 8108.45 8400.35 two major events like demonetisation and
8808.4 8111.6 8412.8 controversial USA President ship candidate
8775.9 8079.95 8398
8777.15 8074.1 8417 Trump winning the elections on a single day
8867.45 7929.1 8435.1 which can likely to have a major impact on stock
8831.55 8002.3 8349.35
8723.05 8033.3 8391.5 market.
8706.4 7965.5 8475.8 TABLE NO.: 7
8745.15 8114.3 8602.75
8591.25 8126.9 8641.25 TABLE TITLE: Table showing the impact on
8611.15 8142.15 8632.75 stock market, due to the announcement of
8738.1 8224.5 8561.3 Demonetisation as on 08.11.2016: (comparison
8769.15 8192.9 8716.4 table before, during and after demonetisation
8743.95 8086.8 8734.25 is shown below)
8709.55 8128.75 8740.95
8697.6 8143.15 8801.05
8708.8 8102.05 8768.3 Market index as on 08.11.2016: Opening= 8540;
8573.35 8246.85 8769.05 Closing=8543.55
8583.4 8261.75 8778.4
8520.4 8170.8 8793.55 Average of NSE market index before
8677.9 8221.8 8805.05 Demonetisation: 8726.531
8659.1 8182.45 8792.3 Average of NSE market index during
8699.4 8153.6 8724.7 Demonetisation: 8180.799
8693.05 8139.45 8778
8708.95 8104.35 8821.7 Average of NSE market index after
8691.3 8082.4 8879.2 Demonetisation: 8589.094
8615.25 8061.3 8907.85
8615.25 7979.1 8926.9
8638 7985.75 8939.5
8625.7 7908.25 8896.7
0 8032.85 8879.6
0 8034.85 0
0 8103.6 0
0 8185.8 0
ANALYSIS:
The closing index of NSE market has increasedby the end of the day of Demonetisation.
From the table we can see that the average taken from NSE market index before, during and after
demonetisation has a gradual increase from time to time.

Graph no.7
Graph showing the impact on stock market, due to the announcement of Demonetisation as on
08.11.2016:

INTERPRETATION:
The above graph gives a clear picture of fluctuations due to demonetisation.
Before demonetisation there is fluctuations in the market, but during the demonetisation major and huge
fluctuations can be seen along with the down fall. It was due to the tensions created in the minds of investors
and markets regarding demonetisation, effect on major sectors of the economy.
After demonetisation the market has constantly rose up which is a positive sign, this can be due to the
understanding of the investors that this fluctuation and downfall will only be for a short-term period, but will
be benefited in the long-run.
TABLE NO.: 8
TABLE TITLE: Table showing the impact on stock market, due to the announcement of UP Election
Results as on 11.03.2017:
15 days NSE
market index 15 days NSE
before the market index after Market index as on
announcement of the announcement % of increase or 14.03.2017: Opening= 9091.65
UP Elections of UP Elections decrease before and ; Closing= 9087
Results Results after the announcement Correlation coefficient:
of UP Election Results 0.52378
8821.7 9084.8 0 0
8879.2 9153.7 0.65 0.75 ANALYSIS:
8907.85 9160.05 0.32 0.07
There exists a positive
8926.9 9126.85 0.21 -0.36
8939.5 9121.5 0.14 -0.06 correlation between the stock
8896.7 9030.45 -0.48 -1.01 market performance and UP
8879.6 9086.3 -0.19 0.61
8945.8 9108 0.74 0.24 election results. Even though
8899.75 9045.2 -0.52 -0.69 there is a decrease in the
8897.55 9100.8 -0.02 0.61
market index by the end of the
8963.45 9143.8 0.74 0.47
8946.9 9173.75 -0.18 0.33 day of results, we can see a
8924.3 9173.75 -0.25 0 gradual increase in index day
8927 9237.85 0.03 0.69
8934.55 9265.15 0.08 0.29 by day.

Graph no.8
Graph showing the impact on stock market, due to the announcement of UP Election Results as on
11.03.2017:

INTERPRETATION:
The performance of the market before the announcement of UP election results was low with less
fluctuations. Whereas we can see market index rising after the results announcement and constantly going
up, this can be due to the expectation of the investors about BJP winning elections with majority seats, which
in turn boosts the expectation of investors.
FINDINGS:
 Kotak Mahindra Bank Ltd., stock after acquiring ING Vysya Bank has a negative correlation with the
stock market, where the stock price of Kotak Mahindra Bank Ltd., may go up when the market is
down or may go down when the market is up.
 Even the conflicts arising in the company/ a firm has an impact on its stock price, it can be seen in
case of TCS Ltd., where the conflict between the Tata Sons and Cyrus Mystri has resulted in a
negative relation of the company stock with the stock market.
 Stock split by JSW Steel Ltd., has established a positive impact on the stock and positive correlation
with the stock market.
  Rights issued to equity shareholders by Kingfa Science and Technology (India) Ltd., has led to
positive correlation with the stock market.
 The international event where Britain exiting from Europe widely called as BREXIT has a negative
impact and correlation with the Indian stock markets.
 The international event where Donald Trump winning USA President ship has a negative impact and
correlation on market index.
 The average of NSE market index due to demonetisation(2016) has increased during demonetisation
period from the past index, and even increased after demonetisation period from the past index.
 Announcement of UP Election results(2017) has a positive and highest impact on the stock market
index so far compared with rest of the events.
SUGGESTIONS:
 There are various economic and corporate events occurring every now and then, but it’s very
important to define a proper and major events along with the occurring dates which has a major
impact and effect on country’s economy and stock market.
 In cases where the date is difficult to identify or the event is partially anticipated, event studies would
be less useful.
 The potential econometric problems raise against event analysis, so these problems can be easily
resolved by using daily market index and stock price of companies listed on stock exchange, instead
of monthly data.
 In addition, if over the years researchers are perfecting the event study methodology, this
methodology will emerge as a perfect one.
 Event analysis is of immense use to the stake holders to understand changes in share prices of
companies and market movement due to the occurrence of events.
 Events such as political events, like, BREXIT, Union budget(2017), Trump winning USA President
ship etc. has a big impact on the stock market, hence, investor should have a constant check on the
market before making investments and anticipation.
 Investor should anticipate market move on trends happening in the economy and then decide on their
investment options/preferences.
 Investor should know about how to do fundamental analysis of the company, so that they can
understand on upcoming events such as dividend issue, rights issue, bonus issue, quarterly
statements, stock splits etc. of the company.
CONCLUSIONS:
The event analysis is considered to investigate the impact of an event on stock market or country’s economy.
In this study the events which have been considered are corporate and economic events.
Only those events which has a major impact on the company stock performance and NSE market index are
considered in this paper.
This study is of immense utility to investors as they can understand changes in share prices of companies
and market movement during bonus announcements, stock splits, country’s union budget, Industrial
Production Index, elections and other economic and corporate events having impact on stock market and
economy. It also would be helpful for the investors in making good portfolio investment decisions in the
right time.
To find out the impact of company/corporate events on stock market, company’s stock prices is considered.
In case of economic events NSE market indices are considered. The stock prices and market indices are
correlated to find out whether they have a positive/negative/neutral relationship.
In case of positive correlation the occurrence of economic and corporate events goes along with the market,
in case of negative correlation the occurrence of economic and corporate events goes opposite to market.
If the correlation is neutral there exists no relation at all between the occurrence and stock market/economy.
Hence, the event analysis is a classic design. Classic designs are simple and elegant, and above all else,
functional. The event analysis has become a classic because it works. It can be used under less than perfect
conditions and still produce reliable results. It is a very serviceable design. It is easy to learn to use, reliable
and easy to interpret.
In a general context, event analysis has shown that, as would be expected in a rational marketplace, prices do
respond to new information.
It can be expected that event analysis would be a valuable and widely used tool in economics, finance and
other sectors.

BIBLIOGRAPHY:

TEXT BOOKS-

 Appannaiah, H.R, & .H.R.Ramanath. (2017). Principles of Event Management (02nd ed.).
Bangalore, Karnataka: Himalaya Publishing House. doi:ISO 9001:2008 certified
 Srikanth S., Nisha Asif., &Prabhakar, S. (2017). Principles of Event Management (02nd ed.).
Bangalore, Karnataka: Skyward .doi:ISO 9001:2009 certified

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