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Abstract
Arrival of new information and adjustment of stock prices to such information had been in focus since the seventh decade of 21ST century. Fama, the Nobel laurate in economic sciences in 2013 and is called the father of modern finance framed ‘Efficient Market Hypothesis’ in which he claimed that the markets are efficient in incorporating new information into prices and trading on such publicly available information to get excess returns in market is not at all possible on a sustained basis. This phenomenon is called semi strong efficiency of the market. In this paper, a negative information, the Satyam Accounting Scam has been taken up to enquire into its impact on share prices among IT sector companies other than Satyam by applying Market Adjusted Model of event study methodology. Of the sixteen companies listed in National Stock Exchange (NSE), seven companies recorded negative abnormal returns in line with the tainted company in different magnitude and a group company of Satyam did also fall in the negative effect to evidence support for ‘Spillover Effect Hypothesis’ in which the impact of a leading company spread over to other related and unrelated companies to make the information effect not only firm specific but also industry wide. The speed with which the scam information got adjusted supported semi strong form of efficiency.