Abstract
The main aim of this paper is to evaluate the impact of demonetization on Indian firm’s quarterly financial performance before and after demonetization period (March-December, 2017), and to find out if companies’ age helps to face financial disruption. Four variables, which are net sales, total income, net profit after tax, and earnings per share, were taken as proxies for analyzing the quarterly financial performance of 2,892 companies listed on Bombay Stock Exchange (BSE), National Stock Exchange (NSE), and Calcutta Stock Exchange (CSE). Nonparametric test, particularly Wilcoxon Matched-Pairs Signed Rank Test and Kruskal-Wallis one-way analysis of variance, were applied in analyzing the data. Results reveal that there is a statistically significant difference between the financial performance before and after demonetization at 5% level of significance. It was also found that the decrease/increase in the financial performance of all the firms was affected by the demonetization process, irrespective of their ages. The findings could be useful for financial managers and financial consultants, as they would be able to focus on the issues that matter most at the time of financial disruption.
Highlights
Demonetization is a major monetary policy decision, which has an impact on businesses and the economy as a whole
There is no sense to compare the impact of demonetization with the global banking sector crisis of 2008
The study aimed at examining the impact of demonetization on the financial performance of 2,892 listed companies and finding out whether companies’ age makes a difference in the financial performance during the demonetization period
Summary
Demonetization is a major monetary policy decision, which has an impact on businesses and the economy as a whole. Four official reasons were behind the demonetization: to circumscribe corruption; curb the funding for anti-social elements like terrorist activities, contraband, espionage; take care of the menace of tax evasion and black money; and push towards digitalization in the economy (Chandrasekhar & Ghosh, 2018; Gupta et al, 2017; Singh & Singh, 2016). Holders of the old notes were allowed to deposit them at banks and post offices until December 30, 2016, with certain restrictions. They faced substantial penalties unless they were able to explain where the money came from and whether it was already taxed (Dharmapala & Khanna, 2018)
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
