Learning outcomes

After this module you should be able to:

1. Lay out the Indian results calendar under the LODR and PIT rules, choose the correct event day for an announcement, and compute a standardised unexpected earnings (SUE) score from a quarterly EPS history.
2. Derive why naive earnings expectations produce post-earnings-announcement drift, state what the Bernard–Thomas evidence shows and why the drift has persisted, and measure drift on a panel with an event-study estimator: the market model, abnormal returns and the CAR $t$-test (Proposition 6A.4), with the correction for clustered results days.
3. Read the market's implied earnings-day move from option prices (derived in M09A · 9A.10) and compare it with the stock's history of results-day moves.
4. Derive the EPS-accretion condition and the value-transfer condition for a buyback, and compute the after-tax payoff of tendering under India's three buyback tax regimes (to September 2024, October 2024 to March 2026, and from April 2026).
5. Apportion cost basis in a demerger, read the special pre-open price discovery, and compute the payoff of tendering in an open offer and the discovered price in a reverse book building.
6. Derive the implied completion probability and annualised return of a merger-arbitrage spread, and explain why its payoff resembles a short put.
7. Derive Rock's winner's-curse explanation of IPO underpricing and summarise the evidence on initial and long-run IPO returns.
8. Derive the residual-income model and the justified P/B of a bank, build ROE from NIM, fees, costs and credit cost, and relate gross NPA, net NPA and provision coverage exactly.
9. Value a cyclical on normalised earnings, decompose IT-services growth into constant-currency and currency effects, and split consumer growth into volume and price.
10. Build long–short factor returns from a cross-section with correct timing, test their premia, and read the Indian factor evidence with its volatility and crowding risks.