THE IMPACT OF DIFFERENT CORPORATE EVENT ANNOUNCEMENTS ON SHORT-RUN STOCK RETURNS; EVIDENCE FROM COLOMBO STOCK EXCHANGE

Abstract

Publicly traded markets function as the base of our economic system. Efficiently valued financial markets power up national development according to Malkiel (2010). Market effectiveness shows precise security assessment results. When information travels rapidly into stock prices in an efficient market it won't help investors earn more than the market or find ways to get abnormal returns from what they already know. This paper examines the efficiency of the market in relation to four prominent corporate events: We examine the information event impact of stock dividend announcements alongside bonus issues, rights issues, and stock splits under Sri Lanka's conditions. A sample of 13 stock dividend and 9 bonus issue releases formed the base data alongside 31 rights issue and 29 stock split announcements. This research uses market model event studies to track price reactions through Average Abnormal Returns and Cumulative Average Abnormal Returns calculations. The research discoveries question what current market efficiency stories tell us. Investors in Sri Lanka currently lack complete data about stock price reactions to corporate news. Our study examines market reactions to corporate event announcements in CSE using 82 unique events across 14 economic zones between 2019 and 2021.