Title: Impact of open offer announcements on shareholders' wealth: evidence from India

Authors: Vinay Kumar Vemula; Juhi Gupta; Smita Kashiramka

Addresses: Department of Management Studies, Indian Institute of Technology Delhi, Hauz Khas, New Delhi, India ' Department of Management Studies, Indian Institute of Technology Delhi, Hauz Khas, New Delhi, India ' Department of Management Studies, Indian Institute of Technology Delhi, Hauz Khas, New Delhi, India

Abstract: In an efficient market, stock prices reflect all the publicly available information so as to result in zero abnormal returns. The efficiency of the market is gauged using the time taken by stock prices to adjust and reflect newly available information. The current study uses an open offer as an event to assess the efficiency of the Indian stock market by employing the event study methodology on a sample of 96 open offers made during the period 2011 to 2017. The findings suggest that open offer announcements create substantial positive returns for the target firm shareholders; thus, depicting the inefficiency of the Indian stock market in the semi-strong form. Further, segregating the sample based on the motive of the offer and the success of the open offer, the study reports different factors to be influencing the abnormal returns.

Keywords: corporate restructuring; open offer; takeover announcement; cumulative average abnormal return; shareholders' wealth; target firm; event study; event window; India.

DOI: 10.1504/IJFSM.2020.113165

International Journal of Financial Services Management, 2020 Vol.10 No.4, pp.350 - 367

Received: 31 Mar 2020
Accepted: 01 Jul 2020
Published online: 22 Feb 2021 *

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