This website uses cookies to ensure you have the best experience. Learn more

Impact Of Public Holiday On Stock Returns

4200 words - 17 pages

CHAPTER 1: INTRODUCTION
1.1 Background
Stock markets play a significant role in the wellbeing of an economy; thus efficient stock markets will positively affect the economy in a country. Concept of efficient markets was first coined by Fama(1970), describes an efficient market, as a market with fully available information to all investors, while at the same time stock prices fully reflect all the information available. Consequently, no individual investor will be able to reap profits above the average. Fama further describes the EMH in three form i.e. weak, semi-strong and strong form of efficiency.
In Weak form efficient market stock prices have a random movement. We cannot use ...view middle of the document...

And if seasonal anomalies persist in the market then market will be inefficient and investors will have arbitrage opportunity to gain abnormal returns (Lucy & Dowling, 2005). Investors have higher returns because they try to buy share before holidays (Brockman & Michayluk, 1998).

This paper is an effort to find out whether public holidays have any impact on KSE-100 returns. The rationale behind this is that investors will sell or buy stock when holiday is arriving. So stock prices will be affected. Data from January 2009 to November 2013 was gathered for the study holiday’s impact was checked using independent sample t-test. The results show that public holiday anomaly persists in Pakistan and investor can use this information to earn abnormal excess returns.

1.2 Research Statement
To determine the impact of public Holidays on KSE-100 returns

1.3 Objectives
To analyze Karachi stock exchange efficiency.
To check the holiday effect on KSE.
To check the persistence of holiday anomaly over the last 5 years.
To check whether pre holiday’s effect last for more than 1 to 2 days.

1.4 Significance
This study will help investor to understand the behavior of stock exchange towards public holidays. Whether to invest or not in KSE to get higher returns. Study will also help KSE regulators to understand market efficiency and if any corrective measures are needed should be implemented. On academic side this study will increase the literature regarding financial anomalies and specifically public holiday anomaly.

CHAPTER 2: LITERATURE REVIEW

Market efficiency is the basic theory in behavioral finance. Efficient market is the market in which all information regarding stocks is available to the public, and is reflected in stock prices. In efficient market there is no arbitrage opportunity. This market efficiency is further classified into three categories. Weak form market efficiency, semi strong form and strong form of efficiency (Fama, 1991).
Stock market efficiency is highly studied topic since fama hypothesis. Stock market efficiency is affected when any news disturbs the stock market returns. Secondly there are anomalies in stock market which produce excess returns in certain periods. These anomalies are technical and calendar anomalies. In calendar anomalies some days, month or period have different returns than other days and months. These anomalies include January effect, weekend effect, turn of the month effect, and holiday effect (Schewart, 2002). These anomalies change the stock market efficiency because stock prices can now be predicted, and make it possible for certain investors to get higher returns. Like if day of the week effect persists in a market it will help certain investors to devise a selling strategy for the stocks on Friday and buy on Monday (Aggarwal & Tandon, 1994). Likewise in January effect, loser stocks are usually sold in December for tax adjustment and shares are bought again in start of...

Other Papers Like Impact of Public Holiday on Stock Returns

Why Is Raising Awareness and Educating the Public About the Dangers of Asbestos and the Impact of Mesothelioma on a Family Important?

1453 words - 6 pages Why is raising awareness and educating the public about the dangers of asbestos and the impact of mesothelioma on a family important? Asbestos, meaning inextinguishable in Greek, is a microscopic, fibrous mineral used in various products because of its resistance to heat, fire and chemicals. It is the political compellation of a group of similar minerals with separable, long, and thin fibers. These fibers are strong and flexible enough to be

Impact of Tourism on Environment Essay

631 words - 3 pages Vu Thu Phuong Student ID: 30110714 Topic: The Impact of Tourism on Environment In recent years, the tourism industry is considered as an important economic sector in many countries around the world, including Vietnam. Although tourism industry brings tremendous benefits to a country’s development, the impact of tourism on natural habitat cannot be denied. In this essay, I will discuss both positive and negative impact of tourism on our

Impact of Wto on Globalization

2442 words - 10 pages barrier is usually caused by the importing country or the exporting country for the protection of their environment and set a variety of public health protection measures, regulations and standards, which belongs to a kind of technical trade barriers impacting the import and export. The green trade barriers have a wide range of impact, not only having made strict rules and restrictions on the areas of human health-related primary products

Impact Of Csr On Employee

2076 words - 9 pages of individual dimensions, a summary report of each hypothesis will report findings to support or reject each hypothesis. The data collected were used to determine the impact of occupational stressors on job satisfaction among human service providers specifically, though not exclusively, among those working at a housing agency. In this chapter, the research also examined the impact of occupational stressors on different personality types; how

Impact Of Technilogy On Customers

1382 words - 6 pages PAGE PAGE 1 Impact of Technology Impact of Technology on CustomersTEC 401 - Human Factors in TechnologyAugust 15, 2007Impact of Technology on CustomersOur world has become a vital part of technology and this has affected people of all walks of life, for example, doctors, students, engineers, and people in business. Technology has become the technical means of improvement in all organizations. Due to so much dependency, organizations use

Impact of Computers on Education

1361 words - 6 pages Impact of Computers on Education Computers have had a large impact in education. There are many things that are done differently in schools now and that goes for all age groups. Computers can really help a teacher in many positive ways. If it were not for computers, there would be many helpful things that would not be in school, for example if it were not for computers we would not have calculators, we also would not have electronic

Impact of Nics on Economy

728 words - 3 pages Discuss the impact of Newly Industrialised Countries (NICs) on the global economy. (10) Newly industrialised countries are countries whose level of economic development ranks somewhere between the developing and first-world classifications. These countries have moved away from an agriculture-based economy and into a more industrialised, urban economy. They have experienced rapid growth over the last 40 years because they often have very low

Impact of Divorce on Children

838 words - 4 pages Impact of Divorce on Children Today in society, it is not unusual for a kid to know a friend whose parents are divorced or currently going through the process. It is more and more common for couples these days to separate after years of marriage than it was back in the day. Many adults, however, do not realize the consequences that can come from this when their kids are involved. Dealing with their parents' divorce is not easy for some and can

Impact of Ct on Private Public Life

619 words - 3 pages conversation on the phone, the existing communications systems are not just phones plane but also receiving phone messages, phone lines and other devices. In a communication system is not only limited to how to exchange information, but also on the equipment used, its application, the implications of communication technology, manipulation, and the potential for exchange of information within the system communication. World of communication and

Impact of Regulation on Supply of Labor

829 words - 4 pages Analysis of the impact of regulation on the supply of labor and opportunities for labor can be divided into two avenues. The first path is to consider employment stability within firms already engaged in business in certain industries. A second route to discuss is the creation of new opportunities either by the expansion of current firms or by entry into the market place of new firms. Economists have been engaged in debate over the role that

Impact of Ipo on Indian Economy

925 words - 4 pages on exchange and share is traded on exchange where shares can be bought and sold this is secondary market. In India mainly there are two exchanges –NSE (National Stock Exchange) BSE-Bombay Stock Exchange. The BSE is the oldest exchange in India (started in 1875).NSE started operation on 1994. Today NSE outpaced BSE in volume of trade (2) IPO or Initial Public Offer is a way for a company to raise money from investors for its

Related Essays

Running Head: Impact Of Education Choice On Public Funds

873 words - 4 pages Running head: IMPACT OF EDUCATION CHOICE ON PUBLIC FUNDS u08a1 Impact of Education Choice on Public Funds Capella University ED 7822- The Funding of Educational Institutions Dr. Lee Monroe Both tax credit and voucher programs are school choice options for South Carolina. They are completely consistent with the South Carolina Constitution and relevant South Carolina state court decisions. In 1973, South Carolina

D1 – Evaluate The Impact Of War, Conflict And Terrorism On One Uk Public Service

807 words - 4 pages the name of the actions and other measures taken by the US, Britain and other countries to destroy international terrorist groups, especially al-Qaeda after the attacks on the World Trade Centre and the Pentagon on September 11th, 2001. The actions taken include the wars in Afghanistan and Iraq. Undercover operations by public services personnel is a planned activity involving many people performing various actions like rescue operations

The Effect Of Energy Prices On Transportation And Storage Sector’s Equity Returns: The Iranian Case

4778 words - 20 pages exporters of capital goods and inputs (such as machinery, transport equipment, chemicals) to Iran. Therefore, it is expected that higher energy prices indirectly impact on Iranian firms’ production costs, inducing firms to lower output, reduction of firms’ profits and consequently reduce firms’ future cash flows and stock returns. Fifth, an increase in energy price and the reduction in output and income may induces rational consumers to hold back

Impact Of It On The Essay

884 words - 4 pages were lost through fire, pilferage by pests and even carelessness on the part of personnel. Also, stock is usually taken or checked by personnel in the stores department. Inaccurate results are mostly achieved as a result of scams, over-counting and under-counting. This makes the organisation to incur so much loss as a result of these petty mistakes. Recruiting qualified personnel with the requisite knowledge in Information Technology to work in