Impact of bonus shares on eps and mps an empirical analysis

When additional shares are allotted to existing shareholders without being paid any additional payment for them, it is known as bonus shares. Bonus shares are issued by a company when it intends to pay dividend by issuing shares. Companies giving bonus shares are regarded very highly by investor fraternity. This study scrutinize the impact of bonus issue on earning per share and market price per share after record date during 2009–10 of 15 public limited companies listed on Bombay Stock Exchange. The result divulges that EPS of 9 companies out of 15 companies descent but not in that proportion in which bonus share has been issued. MPS of all the companies decay as a result of bonus shares approximately in the same proportion of bonus shares. Correlation between EPS and bonus share is -0.42 and between MPS and bonus share is -0.77. Thus MPS is much negatively correlated than EPS with bonus shares.