Open AccessThe Effectiveness of Trade for Trade Segment as a Surveillance Effort to Prevent Price Manipulation: Evidence from India
Author(s) -
Kanaiyalal Shantilal Parmar,
Chakrapani Chaturvedula
Publication year - 2016
Publication title -
accounting and finance research
Language(s) - English
Resource type - Journals
eISSN - 1927-5994
pISSN - 1927-5986
DOI - 10.5430/afr.v6n1p9
Subject(s) - stock (firearms) , volatility (finance) , economics , event study , monetary economics , business , stock price , safeguard , international economics , financial economics , international trade , mechanical engineering , paleontology , context (archaeology) , series (stratigraphy) , engineering , biology
Indian Stock Exchanges use trade for trade segment as part of surveillance activity to restrict the unwanted growth in prices to safeguard the interest of the investors. This paper studies the impact of the announcement to shift securities to trade for trade segment on stock returns and volatility of the stock returns using event study methodology. It was found that the securities have generated exorbitant positive average abnormal returns during 30 days in the pre event period, which led the exchanges to shift these stocks to trade for trade segment. The event is found to be significantly impacting average abnormal returns during 30 days in the post event period showing the negative price reaction. Also volatility of the stocks returns is found to be increasing post the announcement.