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Case Code: FINC127
Case Length: 6 Pages 
Period: 2014-2017    
Pub Date: 2017
Teaching Note: Available
Price:Rs.400
Organization : Infosys Limited
Industry : IT Industry, Financial Services
Countries : India
Themes: Efficient Market Hypothesis  
Case Studies  
Business Strategy
Marketing
Finance
Human Resource Management
IT and Systems
Operations
Economics
Leadership & Entrepreneurship

Efficient Market Hypothesis: Evidence from Bonus Issue

 

ABSTRACT

 
This case study discusses the bonus issue announced by Infosys, Indian multinational IT major, in April 2015.The case also provides the result of a study, which showed that in most cases the share price rose on the record day as well as one year after the record date. Taking the clue from the study, is it correct to conclude that an investor can earn superior risk-adjusted returns by trading on information about a bonus issue? In the backdrop of this, the case study is helpful to test and analyze whether the behavior of the Indian stock market supported Weak, Semi-Strong, or Strong form of Efficient Market Hypothesis.
 
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Issues

The case is structured to achieve the following teaching objectives:
  • To analyze whether a bonus issue acts as a signal of the upward movement of share price.
  • To test Efficient Market Hypothesis with real-time data.
  • To discuss the significance of Efficient Market Hypothesis for various market participants This case is meant for graduate/post-graduate level students as a part of the Security Analysis curriculum
Contents
INTRODUCTION
BONUS ISSUE: A POSITIVE SIGNAL?
EXHIBITS

Keywords

Weak form, Semi-Strong form, Strong form, Run test, Autocorrelation test, Standard Error, Event study, Cumulative Abnormal Return (CAR), Cumulative average abnormal return (CAAR), Durbin-Watson Test, T-test, Squared Residuals

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