Abstract

http://ssrn.com/abstract=1587109
 
 

References (31)



 
 

Citations (1)



 


 



Stock Splits and Bond Yields: Isolating the Signaling Hypothesis


David Michayluk


University of Technology, Sydney; Centre for International Finance and Regulation (CIFR); Financial Research Network (FIRN)

Ruoyun Zhao


University of Toronto - Rotman School of Management


Financial Review, Vol. 45, Issue 2, pp. 375-386, May 2010

Abstract:     
One explanation offered for stock splits is that the split signals positive information by reducing the stock price range in expectation of improved future prospects. Price declines also lead to changes in stock price dynamics, but related securities are not subject to these other changes and therefore can be used to provide a separate assessment of the markets’ interpretation of the split. We examine corporate bond issues around stock splits and find a significant decline in the bond yield spread following stock splits, supporting the signaling hypothesis. We also confirm improvements in forecasted and realized earnings subsequent to stock splits.

Number of Pages in PDF File: 12

Accepted Paper Series


Date posted: April 12, 2010  

Suggested Citation

Michayluk, David and Zhao, Ruoyun, Stock Splits and Bond Yields: Isolating the Signaling Hypothesis. Financial Review, Vol. 45, Issue 2, pp. 375-386, May 2010. Available at SSRN: http://ssrn.com/abstract=1587109 or http://dx.doi.org/10.1111/j.1540-6288.2010.00252.x

Contact Information

David Michayluk
University of Technology, Sydney ( email )
Finance Discipline Group
UTS Business
Sydney, NSW 2007
Australia
Centre for International Finance and Regulation (CIFR) ( email )
Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia

Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Ruoyun Zhao
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6
Canada
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References:  31
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