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http://ssrn.com/abstract=899326
 
 

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The Performance of Stocks that are Reverse Split


Terrence F. Martell


City University of New York (CUNY) - Baruch College - Zicklin School of Business

Gwendolyn P. Webb


City University of New York (CUNY) - Baruch College - Zicklin School of Business

December 22, 2005


Abstract:     
An unusually high number of Nasdaq National Market stocks were reverse split following the decline in Nasdaq prices in the year 2000. We test whether these splits were driven by the overall market decline. We find that the performance of stocks with reverse splits in poor overall stock market conditions is better (less negative) than that in good market conditions, and that the differences in performance appear three to five months after the split. This suggests that the longer-term outcomes of reverse stock splits are associated with the market environment at the time of the split. In view of this, changes that Nasdaq made to relax some of its listing standards are well justified.

Number of Pages in PDF File: 31

Keywords: reverse stock splits, Nasdaq listing requirements

JEL Classification: G14, G32

working papers series





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Date posted: May 6, 2006  

Suggested Citation

Martell, Terrence F. and Webb, Gwendolyn P., The Performance of Stocks that are Reverse Split (December 22, 2005). Available at SSRN: http://ssrn.com/abstract=899326 or http://dx.doi.org/10.2139/ssrn.899326

Contact Information

Terrence F. Martell
City University of New York (CUNY) - Baruch College - Zicklin School of Business ( email )
One Bernard Baruch Way
New York, NY 10010
United States
646-312-2070 (Phone)
212-312-2071 (Fax)
Gwendolyn P. Webb (Contact Author)
City University of New York (CUNY) - Baruch College - Zicklin School of Business ( email )
Department of Economics & Finance
P.O. Box B10-225, 1 Bernard Baruch Way
New York, NY 10010
United States
646-312-3485 (Phone)
646-312-3458 (Fax)
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