Impact of Corporate (Rights Issue) Action on Stocks in India

Rights issue is the one of the corporate action where companies issue the stocks to existing shareholders at a discounted price to the prevailing market price. Discounted price or proportion of the rights may stimulate the investors to buy or sell of the shares before and after of ex-rights issue date and this may cause the abnormal returns in the stock around ex-rights issue date. In this paper tries to understand the abnormal returns around ex-rights issue by using companies which declared ex-rights issue in the year 2017 in India. Researcher has selected ten companies randomly from the companies which declared ex-rights issue in the year 2017 to test the abnormal returns around ex-rights issue and used event study and t test used to test the significance of rights issue impact on share price