The Journal of Nepalese Business Studies
JBFSIR
Volume 1, Issue 4 (July, 2011)
ISSN 2231-4288
The Journal of Sri Krishna Research & Educational Consortium
JOURNAL ON BANKING
FINANCIAL SERVICES &
INSURANCE RESEARCH
Internationally Indexed & Listed Referred e-Journal
IMPACT OF RIGHT ISSUE ON MPS AND EPS
REKHA RAHEJA
Assistant Professor (Deptt. Of Commerce),
Hindu College, Sonepat
RAJESH BHADWAJ
Research scholar (Deptt. Of Commerce),
MDU, Rohtak
PRIYANKA
Assistant Professor (Deptt. Of Business Administration),
Hindu College, Sonepat
ABSTRACT:
This study scrutinize the impact of right issue on earning per share and market price per share during
2009-10 of 10 public limited companies listed on Bombay Stock Exchange. Right shares are those shares which are issued to existing shareholders. According to section 81 of Indian company act 1956, “Company can issue right shares only after the two years of creation of company or one year of first issue of shares whichever is earlier." The result divulges that EPS of 2 companies out of 10 companies descent but not in that proportion in which right share has been allotted while other 8 companies demonstrate increasing trend in EPS.
MPS of 7 companies out of 10 companies decayed as a result of right issue but not in that proportion in which right share has been issued. . Correlation between EPS and right issue is 0.11 and between MPS and right
issue is -0.80. Thus MPS is much negatively correlated than EPS with right issue.
KEY WORDS: Right issue, EPS, MPS
Sri Krishna International Research & Educational Consortium http://www.skirec.com - 77 -
JBFSIR
Volume 1, Issue 4 (July, 2011)
ISSN 2231-4288
INTRODUCTION:
A rights issue is a way by which a listed company can raise additional capital. However, instead of going to the public, the company gives its existing shareholders the right to subscribe to newly issued shares in proportion to their existing and market capitalization.
In case of a rights issue,
Volume 1, Issue 4 (July, 2011)
ISSN 2231-4288
The Journal of Sri Krishna Research & Educational Consortium
JOURNAL ON BANKING
FINANCIAL SERVICES &
INSURANCE RESEARCH
Internationally Indexed & Listed Referred e-Journal
IMPACT OF RIGHT ISSUE ON MPS AND EPS
REKHA RAHEJA
Assistant Professor (Deptt. Of Commerce),
Hindu College, Sonepat
RAJESH BHADWAJ
Research scholar (Deptt. Of Commerce),
MDU, Rohtak
PRIYANKA
Assistant Professor (Deptt. Of Business Administration),
Hindu College, Sonepat
ABSTRACT:
This study scrutinize the impact of right issue on earning per share and market price per share during
2009-10 of 10 public limited companies listed on Bombay Stock Exchange. Right shares are those shares which are issued to existing shareholders. According to section 81 of Indian company act 1956, “Company can issue right shares only after the two years of creation of company or one year of first issue of shares whichever is earlier." The result divulges that EPS of 2 companies out of 10 companies descent but not in that proportion in which right share has been allotted while other 8 companies demonstrate increasing trend in EPS.
MPS of 7 companies out of 10 companies decayed as a result of right issue but not in that proportion in which right share has been issued. . Correlation between EPS and right issue is 0.11 and between MPS and right
issue is -0.80. Thus MPS is much negatively correlated than EPS with right issue.
KEY WORDS: Right issue, EPS, MPS
Sri Krishna International Research & Educational Consortium http://www.skirec.com - 77 -
JBFSIR
Volume 1, Issue 4 (July, 2011)
ISSN 2231-4288
INTRODUCTION:
A rights issue is a way by which a listed company can raise additional capital. However, instead of going to the public, the company gives its existing shareholders the right to subscribe to newly issued shares in proportion to their existing and market capitalization.
In case of a rights issue,
References: White R.W.and Lusztig P.A., “The Price Effects of Right Offering: Journal of Financial and Quantitative Analysis”( 1980) . Kalle Rinne and Matti J. Suominen, “A Behavioral Theory of Public and Rights Offerings”: Empirical Evidence from Europe (Feb 28,2007), http://ssrn.com/abstract=966156 Raste, Deepak R.Chari and Vijaylaxmi, “Regulatory impact: a case study of right issues in emerging capital market of India” (17 Jan, 2010)