Labour Market Reforms and Firm Value: Evidence from India's Labour Code Announcements

India has added 16.83 crore jobs in six years, a 35% jump in employment — from 47.5 crore in 2017–18 to 64.33 crore in 2023–24. The improved labour-market outlook appears to have contributed to a broader process of socio-economic transformation which reflected in the substantial decline in the proportion of the population living below the international poverty line. Concurrently, India’s social protection framework has expanded rapidly, evolving into one of the most extensive systems of its kind globally. In order to simplify and strengthen the framework governing workers’ rights, the Government consolidated 29 labour laws into four comprehensive Labour Codes. This study evaluates the market price reaction of 20 Indian listed companies across a 21-day event window. The empirical framework measures stock price efficiency by testing for Abnormal Returns (AR) and Cumulative Abnormal Returns (CAR) around the new labour code announcement.