Title: Signalling role of 2G scam investigation on stock market returns of select telecom companies in India

Authors: Pooja Gupta; Nainika Jain

Addresses: Symbiosis Institute of Business Management, Bengaluru, Symbiosis International University (SIU), 95/1,95/2, Electronic City Phase I, Hosur Road, Bengaluru 560100, Karnataka, India ' Credit Suisse, Cluster a, Wing 1&2, EON Free Zone, Kharadi, Pune, Maharashtra-411014, India

Abstract: India is one of the biggest markets in telecommunication. It is one of the fastest growing sectors in India. The growth in the sector is also fuelled by one of the lowest call rates in the world. The growth in technology in the telecom sector and the growing affordability of the technology led to adoption of 2G technology in the Indian markets. The adoption of technology led to the Government of India holding an auction for spectrum for the telecom service providers. The irregularities in allocation of spectrum for 2G technology has resulted in one of the biggest scams perpetrated ever in India. The scam was believed to be all pervasive involving various government officials, politicians and telecom service providing companies. As the scam unfolded over 2009 to 2017, there was a lot of upheaval in the share prices of all the telecom companies listed in India. This study identifies the signalling effect of disclosures in 2G scam investigation by using event study methodology. The study finds that news regarding the scam during the time period affects the returns from the shares of telecom companies in a weak manner.

Keywords: event study; telecom; stock markets; expected returns; signalling; scam; behavioural finance; India.

DOI: 10.1504/IJPSPM.2019.101071

International Journal of Public Sector Performance Management, 2019 Vol.5 No.3/4, pp.370 - 383

Received: 29 Jan 2018
Accepted: 28 Sep 2018

Published online: 05 Jul 2019 *

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