Sooriyakumaran Logeswary and Velnampy Thirunavukkarasu
This study investigates the reaction of market and efficiency of market to announcement of impairment loss write down in Colombo Stock Exchange (CSE) from 2008 to 2014. This research is identified fifty-eight events of twenty listed manufacturing companies in CSE. The existent study used the standard event study approach to find the results. The hypotheses of operational were framed and results discovered that 55% of Average Abnormal Return (AAR) are positively and 45% of AARs are negatively on the occasion day “0” (event day). The results reveal negative AARs of -0.37% and impact of negative significant on Share Price (SP) (t=-1.6682) at 10% level which incurred on the impairment loss announcement date. These results shows that impairment loss writes down events indicate significant negative information to the CSE. End of the windows period abnormal returns are gained by market as positive return of CAAR of 9.15% during the windows period of 61 days. It reveals that CSE has not supported to the semi-strong form market efficiency which is run on publicly available information on CSE. Study focused that the CSE was not semi-strong efficient market. The outcome of the research will help to identify the market efficiency of CSE and do the necessary action by the Sri Lankan government and CSE to protect the investors and support to the economic growth of the country.
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