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    Maria Christina Sitepu
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    Jain, Tantri, and Thirumalai analyze the price impact of an exogenous share sale forced by a regulatory change in India. They find the affected firms saw a 4.5% negative excess return the week of the sale. However, the price impact reversed within 55 to 75 days after the event. These results support the view that long-term demand curves for stocks are horizontal, as stock prices return to normal levels after the temporary price pressure of the forced sales subsides.

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    Jain, Tantri, and Thirumalai analyze the price impact of an exogenous share sale forced by a regulatory change in India. They find the affected firms saw a 4.5% negative excess return the week of the sale. However, the price impact reversed within 55 to 75 days after the event. These results support the view that long-term demand curves for stocks are horizontal, as stock prices return to normal levels after the temporary price pressure of the forced sales subsides.

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    © All Rights Reserved
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    12 views1 page

    Published Papers

    Uploaded by

    Maria Christina Sitepu
    Jain, Tantri, and Thirumalai analyze the price impact of an exogenous share sale forced by a regulatory change in India. They find the affected firms saw a 4.5% negative excess return the week of the sale. However, the price impact reversed within 55 to 75 days after the event. These results support the view that long-term demand curves for stocks are horizontal, as stock prices return to normal levels after the temporary price pressure of the forced sales subsides.

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    © All Rights Reserved
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    Published Papers

    Jain, Ankit., Tantri, Prasanna., Thirumalai, Ramabhadran S. (Forthcoming) "Demand Curves For
    Stocks Do Not Slope Downwards: Evidence Using an Exogenous Supply Shock", Journal of Banking
    and FinanceCentre for Analytical FinanceClose >We analyze the price impact of an exogenous share
    sale by inside blockholders, who were forced to sell a part of their shareholdings due to a regulatory
    change in India. The affected firms experience a negative excess return of 4.5% during the issue
    week. Crucially, the price impact reverses in about 55 to 75 days after the event. Our results are
    consistent with the view that the long term demand curves for stocks are at: a view echoed by
    classical finance theories. The short term price reaction to a sale is likely to be a result of temporary
    price pressure.

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