Abstract

http://ssrn.com/abstract=2023865
 


 



Social Learning and Corporate Peer Effects


Markku Kaustia


Aalto University School of Economics

Ville Rantala


Aalto University School of Economics

August 19, 2013

AFA 2013 San Diego Meetings Paper
Midwest Finance Association 2013 Annual Meeting Paper

Abstract:     
We find that firms are more likely to split their stock if their peer firms have recently done so. The effect is comparable to an increase of 40-50% in the share price. Splitting probability is also increasing in the announcement returns of peer splits. These results are consistent with social learning from peers’ actions and outcomes, and the unique features of the setting render alternative explanations unlikely. We find no clear benefit in following successful peer splitters. Firms are sometimes suspected to succumb to imitation, and the effect we document may be a case in point.

Number of Pages in PDF File: 39

Keywords: Peer effect, stock splits, social learning

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Date posted: March 26, 2012 ; Last revised: August 19, 2013

Suggested Citation

Kaustia, Markku and Rantala, Ville, Social Learning and Corporate Peer Effects (August 19, 2013). AFA 2013 San Diego Meetings Paper; Midwest Finance Association 2013 Annual Meeting Paper. Available at SSRN: http://ssrn.com/abstract=2023865 or http://dx.doi.org/10.2139/ssrn.2023865

Contact Information

Markku Kaustia (Contact Author)
Aalto University School of Economics ( email )
P.O. Box 1210
Helsinki, 00100
Finland
+3589 4313 8475 (Phone)
+3589 4313 8678 (Fax)
Ville Rantala
Aalto University School of Economics ( email )
P.O. Box 21210
Aalto, FI-00076
Finland
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