Journal of Finance and Accounting

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Impact of Government Budget Announcement on Stock Market Sector Indices: Evidence from Colombo Stock Exchange

Received: 23 October 2017    Accepted: 20 November 2017    Published: 23 December 2017
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Abstract

This study attempts to investigate the impact of Sri Lankan government budget announcements on five sector indexes of Colombo Stock Exchange, namely banks, finance & insurance; beverage, food & tobacco; manufacturing; motor; diversified holdings. The Event study methodology was used to analyze sector wise stock price behavior during the sample period of 2002 to 2013. Results revealed that although the overall trend of the average returns of each sector around budget announcements are same the magnitude of the reaction is different from sector to sector. Motor was the mostaffected sector and diversified holdings sector was the least affected.

DOI 10.11648/j.jfa.20170506.12
Published in Journal of Finance and Accounting (Volume 5, Issue 6, November 2017)
Page(s) 214-218
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This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Government Budget, Sector Indexes, Average Returns

References
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[3] Brown, S. J. & Warner, J. B. (1985), Using daily stock returns - the case of event studies, Journal of Financial Economics, 14, 3-31.
[4] Gakhar, D. V., Kushwaha, N., & Ashok, V. (2015). Impact Of Union Budget On Indian Stock Market. Scholedge International Journal of Management & Development ISSN 2394-3378, 2 (11), 21-36.
[5] Gupta, A., & Kundu, D. (2006). A Study on the Impact of Union Budgets on Stock Prices in India. The ICFAI Journal of Applied Finance, 12 (10), 65-76.
[6] Hussain, S. M. (2011). Simultaneous monetary policy announcements and international stock markets response: An intraday analysis. Journal of Banking & Finance, 35 (3), 752-764.
[7] Khanna, K., & Gogia, N. (2014). A Pragmatic Study of Budget Announcements & Stock Market Performance: India, US & UK Panorama. VSRD International Journal of Business and Management Research, 4.
[8] Kutchu, V. (2012). Testing semi-strong efficiency of Indian stock market-A study on effect of union budget 2012 on six select sectoral stocks. Researchers World, 3 (3), 74.
[9] Leiderman, L., & Offenbacher, E. K. (1986). Monetary announcements and stock prices in Israel. Economics Letters, 20 (4), 377-381.
[10] Masulis, R. W. (1980), The effects of capital structure change on security prices: a study of exchange offers, Journal of Financial Economics, 8 (2), 139–178.
[11] Mohanty, M. (2004). Stock Market Reaction to Announcement of Policy Changes. The ICFAI Journal of Applied Finance, 34-42.
[12] Ranjani, R. C., Sujeewa, G. M., & Rathnasiri, U. A. H. A. (2009). The impact of the government budget announcement on Colombo Stock Exchange. Research Symposium 2009-Faculty of Graduate Studies, University of Kelaniya.
[13] Sarvananthan, M. (2007). The Government Budget: A Critical Appraisal with Reference to Transparency and Accountability, Pathfinder Foundation Colombo, Sri Lanka.
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Author Information
  • Department of Accountancy & Finance, Faculty of Management Studies, Sabaragamuwa University of Sri Lanka, Belihuloya, Sri Lanka

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    Udani Chathurika Edirisinghe. (2017). Impact of Government Budget Announcement on Stock Market Sector Indices: Evidence from Colombo Stock Exchange. Journal of Finance and Accounting, 5(6), 214-218. https://doi.org/10.11648/j.jfa.20170506.12

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    ACS Style

    Udani Chathurika Edirisinghe. Impact of Government Budget Announcement on Stock Market Sector Indices: Evidence from Colombo Stock Exchange. J. Finance Account. 2017, 5(6), 214-218. doi: 10.11648/j.jfa.20170506.12

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    AMA Style

    Udani Chathurika Edirisinghe. Impact of Government Budget Announcement on Stock Market Sector Indices: Evidence from Colombo Stock Exchange. J Finance Account. 2017;5(6):214-218. doi: 10.11648/j.jfa.20170506.12

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  • @article{10.11648/j.jfa.20170506.12,
      author = {Udani Chathurika Edirisinghe},
      title = {Impact of Government Budget Announcement on Stock Market Sector Indices: Evidence from Colombo Stock Exchange},
      journal = {Journal of Finance and Accounting},
      volume = {5},
      number = {6},
      pages = {214-218},
      doi = {10.11648/j.jfa.20170506.12},
      url = {https://doi.org/10.11648/j.jfa.20170506.12},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.jfa.20170506.12},
      abstract = {This study attempts to investigate the impact of Sri Lankan government budget announcements on five sector indexes of Colombo Stock Exchange, namely banks, finance & insurance; beverage, food & tobacco; manufacturing; motor; diversified holdings. The Event study methodology was used to analyze sector wise stock price behavior during the sample period of 2002 to 2013. Results revealed that although the overall trend of the average returns of each sector around budget announcements are same the magnitude of the reaction is different from sector to sector. Motor was the mostaffected sector and diversified holdings sector was the least affected.},
     year = {2017}
    }
    

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    AB  - This study attempts to investigate the impact of Sri Lankan government budget announcements on five sector indexes of Colombo Stock Exchange, namely banks, finance & insurance; beverage, food & tobacco; manufacturing; motor; diversified holdings. The Event study methodology was used to analyze sector wise stock price behavior during the sample period of 2002 to 2013. Results revealed that although the overall trend of the average returns of each sector around budget announcements are same the magnitude of the reaction is different from sector to sector. Motor was the mostaffected sector and diversified holdings sector was the least affected.
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