Published Online:July 2025
Product Name:The IUP Journal of Accounting Research & Audit Practices
Product Type:Article
Product Code:IJARAP030725
DOI:10.71329/IUPJARAP/2025.24.3.57-73
Author Name:P R Venugopal, Dakshyani Gorjelly and Mamidi Aishwarya
Availability:YES
Subject/Domain:Finance
Download Format:PDF
Pages:57-73
The paper examines the impact of stock splits on market efficiency and liquidity in Nifty 500 companies from 2016 to 2024. While stock splits increase the number of outstanding shares without affecting a company’s market capitalization, they often influence stock prices and investor perception. The study employs event study methodology to measure stock price reactions and trading behavior before and after stock split announcements. Abnormal returns (AR) and cumulative average abnormal returns (CAAR) are calculated to assess stock price deviations from expected returns. These returns are then tested against the t-test to determine the statistical significance; and regression analysis is used to detect key factors relating to stock price changes. Changes in trading volume and market volatility are also assessed to measure liquidity effects. Stock splits are expected to have a short-term positive market reaction on the announcement date. This study assesses the link between investor behavior and efficiency of stock market dynamics from the perspective of how corporate actions affect the market dynamics.
Since its electronic launch in 1994, the National Stock Exchange (NSE) of India has grown into one of the world’s most liquid and technologically-advanced equity markets. NSE firmly demonstrates resilience, scale, and investor confidence.