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Stock Cumulative Abnormal Return (CAR) T-Statistics P-Value Significance
Stock Cumulative Abnormal Return (CAR) T-Statistics P-Value Significance
Return (CAR)
Nabil Bank 1.50% 2.82755 0.00234 Significant
Presentation of Results
trading on past trends, publicly available information or any other private information. Thus if
there is no unusual movements in the stock returns around the event, then it’s obvious that the
Cumulative abnormal returns (CAR) will be fluctuating around zero which means the Prime
minister's sworn in hold no information. If the CAR during event window fluctuates highly then
this indicates prime minster KP oli's sworn in to hold some information. The T- statistic
represents the size of difference relative to the abnormal returns during the event window.
Higher the magnitude of T, greater would be evidence suggesting abnormal returns during that
period. Similarly, P-value less than 0.05 indicates the significance of Prime ministers sworn in
on the returns of the stock indicating the traders would have gained if they have traded during
event window.
days of KP oli's sworn in. Among the five selected commercial banks, all banks except Global
IME bank's CAR are significant. As the CAR of NABIL,KBL, PCBL and MBL are significant,
this means the CAR for these stocks fluctuated highly during the event window. For NABIL, the
CAR is 1.50% meaning the NABIL unusual stock return due to prime ministers sworn in would
be 1.50%. Similarly, for KBL and PCBL, the unusual stock return due to prime ministers sworn
in would be 4.04% and 1.51%. This means the event has caused the fluctuations in the returns of
these stocks which can be referred in the Annex (Figures 1-6) showing the abnormal returns
before and after event. The abnormal returns significance is not found for GIBL as p value <0.05
indicating the absence of unusual returns is found on the GBIL stocks during the event period.
Similarly, looking at the CAR for the Index return during the event time, the p-value is
found to be 0.02895 which indicates the impact of prime ministers sworn in on the stock market
as a whole is significant. Due to the event, the market return has declined by 0.71%. Therefore
this means that there is a significant Abnormal returns in stock market when the prime minster
KP Olis sworn in is made. Looking at the findings on Induvial stocks and NEPSE index, the
presence of abnormal returns is found indicating the reaction of investors to the political events
Figure 1: Abnormal Returns of NABIL before and after Prime ministers sworn in
1200.00% NABIL abnormal Returns
1000.00%
Daily Abnormal Retunr
800.00%
600.00%
400.00%
200.00%
0.00%
Event Date Feb 15
Figure 2: Abnormal Returns of KBL before and after Prime ministers sworn in
1200.00%
KBL abnormal Returns
1000.00%
Abnormal Returns
800.00%
600.00%
400.00%
200.00%
0.00%
Event Date, feb 15
Figure 3: Abnormal Returns of PCBL before and after Prime ministers sworn in
600.00%
400.00%
200.00%
0.00%
Event Date
Figure 4: Abnormal Returns of PCBL before and after Prime ministers sworn in
1200.00% MBL abnormal returns
1000.00%
Abnormal Return
800.00%
600.00%
400.00%
200.00%
0.00%
Event Date feb 15
Figure 5: Abnormal Returns of PCBL before and after Prime ministers Sworn in
800.00%
600.00%
400.00%
200.00%
0.00%
Event Date, Feb, 15
Figure 6: Abnormal Returns of PCBL before and after Prime ministers sworn in
1000.00%
Abnormal Return
800.00%
600.00%
400.00%
200.00%
0.00%
Event Date feb 15