An Impact of Accounting Income Numbers on Stock Performance An Empirical Evaluation in the Context of Indian Stock Market

It is a very general understanding that stock prices are driven by the performance of the company. Again, one of the ways to measure a company's performance is to find out the growth of earnings per share. Hence the declaration of the fantastic / poor result of the company should create investor interest as they will expect the stock price to move higher or lower immediately after such fantastic or poor result. Hence investors will expect to buy/sell the shares based on such information and profit from it in the short run. In this study fifteen no. of companies which is a part of the Nifty 50 index, have been selected to show the behaviour of the stock price movement before and after one month's announcement of the result. The analysis shows that there is no significant association between the actual performance of the company and the stock price movement immediately after the result. Studies have found a significant association between the sign of income forecast error and the sign of cumulative abnormal return before the announcement of the result. Investors should keep in mind such relations while taking investment decisions in the stock market.