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Responses of investors to earnings announcement: does the type of ownership holdings in banks matter?

Akila Anantha Krishnan (Amrita School of Business, Amrita Vishwa Vidyapeetham, Coimbatore, India)
Angan Sengupta (Amrita School of Business, Amrita Vishwa Vidyapeetham – Bengaluru Campus, Bangalore, India)

South Asian Journal of Business Studies

ISSN: 2398-628X

Article publication date: 1 May 2023




This study examines the influence of the ownership structure of banks on investors' behavior by dissecting the investors' response to news regarding performance indicators in private and government-owned banks.


The event study methodology is used for the analysis. The data for 35 banks (out of 38), listed on the National Stock Exchange (NSE) for a duration of 230 months (January 2001 to February 2020) is collected. A set of cross-sectional regression analyses is done to identify variables influencing the returns under differential circumstances.


Private banks seem to display a sharper response to negative changes in earnings, while government-owned banks show a more robust reaction to a positive change. The contrast is seen in the variables, having a bearing on the abnormal returns After controlling for a set of factors, the regression analysis shows the ownership structure may not matter on abnormal returns (on event day), the factors such as a change in quarterly earnings, firm-size and three-year average-sales growth influence the positive and negative changes in abnormal returns of government banks, and predictability for private banks is found to be poor regarding selected indicators.


The study evaluates the role of ownership structure on the heterogeneity in investors' responses to the financial performance of banks, thereby assisting in designing strategies to ensure the optimal outcome around the quarterly earnings announcements.



Anantha Krishnan, A. and Sengupta, A. (2023), "Responses of investors to earnings announcement: does the type of ownership holdings in banks matter?", South Asian Journal of Business Studies, Vol. ahead-of-print No. ahead-of-print.



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