Impact of Corporate Scams on share prices: A study of Indian Stock market

This paper studied the impact of the corporate scams on the share prices of the companies. In the pre-fraud period, the typical fraudulent firm has a higher valuation, invests more and exhibits higher sensitivity of investment than industry peers. The fraud period, by contrast, is characterized by sign cant drops in valuation and investment.Corporate scandals around the world in recent years especially Satyam scandal in India created a need contributed to produce quantitative measures on ownership and to estimate their impact on the value and decision-making process of companies. The study of 8 companies has been made which has undergone the scam in the past 8 years& their impact on Indian Stock Market. Event study has been used to examine the impact of corporate scams on stock returns. The AABRs and CAARRs of overall sample are insignificant at 5% level of significance. The study concluded that the market is very efficient they absorb all the information regarding the event.