ANALYZING THE IMPACT OF CORPORATE EARNINGS ANNOUNCEMENTS ON STOCK PRICE AT EMBRIZON

Abstract

Corporateearningsannouncements represent one of the most significant scheduled information events in equity markets, triggering rapid price discovery as investors interpret reported earnings relative to prior market expectations. The degree and direction of stock price reaction to earnings announcements has been extensively studied in developed markets; however, evidence from emerging mid-cap companies listed on Indian exchanges remains comparatively sparse. This study analyses the impact of quarterly earnings announcements on the stock price of Embrizon—a mid-cap technology and services company listed on the National Stock Exchange of India— across eight quarterly announcement events spanning Q1 FY 2021–22 to Q4 FY 2022– 23. Employing the event study methodology with a market model estimation window of 120 trading days, the study computes abnormal returns in a ±5 day event window surrounding each earnings announcement date and tests for statistical significance using the standardised abnormal return test. Regression analysis is additionally employed to quantify the relationship between the magnitude of earnings surprise (actual EPS minus consensus estimate, scaled by stock price) and the cumulative abnormal return in the event window. Findings reveal that positive earnings surprises generate average cumulative abnormal returns of 7.36% over the five-day post-announcement window, while negative earnings surprises generate average cumulative abnormal returns of - 6.84%, confirming statistically significant stock price reactions to unexpected earnings information. The earnings surprise coefficient in the regression model is 0.842 (p < 0.001), indicating that each 1% earnings surprise generates approximately 0.84% abnormal return. The study provides insights into the price formation process at Embrizon and offers practical implications for investors, corporate finance managers, and market microstructure researchers.