Asian Journal of Research in Business Economics and Management
Year : 2013, Volume : 3, Issue : 8
First page : ( 215) Last page : ( 225)
Online ISSN : 2249-7307.

Announcement of disinvestmentand its impact on stock prices – A diagnostic study

Dr. Natarajan P., Professor and Head, Sreesh K R, Research Scholar

Department of Commerce, Pondicherry Central University

Online published on 9 August, 2013.

Abstract

Disinvestment means the act of an organization or government selling or liquidating an asset or subsidiary. It also means that a reduction in capital expenditure or decision of a company not to replenish depleted capital goods. The mixed economy of India is featured by the co-existence of public, private, joint and co-operative sector.¹ The pattern of industrial development of the country has been influenced to a very significant extent by the roles given to these sectors by the industrial policy. This paper has examined the impact of Disinvestment Announcements on stock prices of disinvested companies. The objective of this paper is to examine the impact of disinvestment announcements on the stock price of the disinvested companies. Event Methodology has been used to analyze this objective and relevant data were drawn from CMIE Database and BSE SENSEX. From this study, it is concluded that the post-disinvestment period shows an increase in the returns of disinvested companies as compared with the pre-disinvestment period. Hence, the announcements of disinvestment matter.

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Keywords

Disinvestment, Event Methodology, Impact of Announcements, Cumulative Abnormal Return.

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