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<p>Government ownership has been reduced in the Indian banking sector. The ownership status of banks variedly influences investors’ responses to banking announcements in developing markets. Hence, this study examines the role of majority stakeholders in banks (government/private) on the heterogeneity in investors’ response to news regarding financial announcements like issuance of capital and debt. The news on capital and debt issuance by 35 banks (of 38), listed on NSE, are analyzed for 110&#xa0;months. Event study methodology is used to analyze the impact of financial announcements on investors’ reactions by reviewing the abnormal returns in two event windows (7-day and 11-day). Furthermore, cross-sectional regression and staggered difference-in-differences analysis are done to discern the impact of selected variables on abnormal return and to understand the varied effects of events in government-owned versus private-owned banks. The results suggest capital issuance goads stronger positive responses for government-owned banks, while debt issuance news prompts an ascent for the government-owned banks and a descent for private-owned ones. The ownership structure significantly influences the abnormal returns only for debt issuance, and not for capital issuance. News on capital issuance sees abnormal returns negatively impacted by age, ROA, capital adequacy, and leverage. For government-owned banks, operating profit ratio is positive, while private banks see only interest spread as negative. Debt issuance news shows non-performing ratios positively influence government banks, while private banks face negative effects from age, sales growth, and capital adequacy, but positive from leverage, size, and interest incidence. Staggered difference-in-difference highlights a differential response from private-owned vs government-owned banks. This study emphasizes the need for customizing investment approaches and communication strategies for government-owned and privately owned banks in the wake of such announcements.</p>

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Investor behavior in response to financial announcements: a focus on ownership holdings in Indian banks

  • 期刊论文

  • 发表日期：

    2026年3月10日

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  • Akila Ananthakrishnan,
  • Angan Sengupta

摘要

Government ownership has been reduced in the Indian banking sector. The ownership status of banks variedly influences investors’ responses to banking announcements in developing markets. Hence, this study examines the role of majority stakeholders in banks (government/private) on the heterogeneity in investors’ response to news regarding financial announcements like issuance of capital and debt. The news on capital and debt issuance by 35 banks (of 38), listed on NSE, are analyzed for 110 months. Event study methodology is used to analyze the impact of financial announcements on investors’ reactions by reviewing the abnormal returns in two event windows (7-day and 11-day). Furthermore, cross-sectional regression and staggered difference-in-differences analysis are done to discern the impact of selected variables on abnormal return and to understand the varied effects of events in government-owned versus private-owned banks. The results suggest capital issuance goads stronger positive responses for government-owned banks, while debt issuance news prompts an ascent for the government-owned banks and a descent for private-owned ones. The ownership structure significantly influences the abnormal returns only for debt issuance, and not for capital issuance. News on capital issuance sees abnormal returns negatively impacted by age, ROA, capital adequacy, and leverage. For government-owned banks, operating profit ratio is positive, while private banks see only interest spread as negative. Debt issuance news shows non-performing ratios positively influence government banks, while private banks face negative effects from age, sales growth, and capital adequacy, but positive from leverage, size, and interest incidence. Staggered difference-in-difference highlights a differential response from private-owned vs government-owned banks. This study emphasizes the need for customizing investment approaches and communication strategies for government-owned and privately owned banks in the wake of such announcements.