Impact of Stock Split on Stock Prices in India

An efficient market is a market in which prices fully reflect all information. Efficiency ofthe market can be judged operationally and informational. The present study is focused on the informational efficiency of the Indian capital market. A capital market is said to be efficient with respect to corporate event announcement (stock split, buyback, bonus issue, right issue, merger and acquisition and dividend etc) contain information and its disseminations. How quickly and correctly the security prices reflect these event contained information shows the efficiency of the stock market. The present study is investigating the impact of stock split on share price in India. Essence of stock split announcement presented in the literature is that the announcement has a positive impact on the returns before and after the event. To examine the impact on stock prices, event study model has been used.