Stock attractiveness after inclusion in stock index: empirical evidence from KSE 100 index

This paper explores attractiveness of stocks on Karachi Stock Exchange using event study methodology. The main findings of this paper are KSE 100 has included small share capital base manufacturing companies during 2000-2002. There is no significant difference in pre tax profitability of companies included (excluded) except for their capital structures. The results from event study seem to suggest that KSE100 stocks would be more attractive to passive investors. The passive investors tracking moderate beta stocks on KSE100 index are better off until beta of the stocks climbs up.