Abstract:
The interim report is one of the crucial instruments that help companies communicate with their shareholders promptly. These reports support investors in deciding whether to hold, buy or sell their shares. Investors/ potential investors will react according to the available information. In Sri Lanka, several studies are available to identify the various events and their impact on share prices even though no one studies interim reporting enouncement and share price reaction using event study methodology. Therefore, the purpose of the study is to assess the impact of interim financial statement announcements on the stock price of licensed commercial banks in Sri Lanka. The study es on the top three licensed commercial banks as a sample. The required data were obtained from Colombo Stock Exchange (CSE) from 2016 to 2019; thus, the study includes 42 quarters and used event study methodology. The estimation window was from day 50 to day 10 of the pre- announcement period. Using the risk-adjusted model, the Abnormal return (AR) and Cumulative Abnormal Return were measured during an event window of 15 days. According to this study, the interim financial statement announcement caused changes in stock return, and thus the information disclosed by the companies were valuable in valuing shares. Further, the studystudy results proved that average abnormal return (AAR) and cumulative abnormal return (CAR) were changed before and after the interim report announcement date. The study concluded that the share prices responded to interim financial statement announcements, and thus the study supported the semi-strong form efficient market hypothesis since stock prices adjust to the available public information.
