Publication Details

This paper was originally published as Barnes, ML and Ma, S, Market Efficiency or Not? The Behaviour of China’s Stock Prices in Response to the Announcement of Bonus Issues, Centre for International Economic Studies Discussion Paper No. 0120, Adelaide University. Original publication information available here


Event study analysis is applied to investigate stock price reaction to the announcement of bonus issues for the emerging stock markets of China. Results show that the issues with a high bonus ratio (number of bonus shares in the issue/number of existing shares) usually attract positive returns and the issues with a low bonus ratio are rewarded with negative returns. The A-shares’ and B-shares’ prices exhibit some similarities in their reactions to bonus issues’ approvals. The hypothesis of semi-strong form market efficiency is rejected only partly for China’s stock markets.